US Agriculture Optimism: Post US–China Deal

Under the Phase 1 trade deal with China signed on Wednesday, China agree to import $32 billion more U.S. agricultural products over the next two years.

Craig Turner is a Senior Ag Broker at Daniels Trading, author of Turner’s Take newsletter, and the host of Turner’s Take podcast. He develops strategies for farmers and others in the agriculture industry. He says many people are glad to see that things are returning to normal, he told NTD on Thursday. “I’m actually at a farmers’ conference right now in Kansas City. Everyone’s very excited that this trade deal gets done. I think it’s relief. I think it’s just nice to see things getting back to normal.” Turner said.

Turner says now farmers and others in the agriculture industry can better manage their expectation of the market supply-and-demand and product prices.

“When the trade war was going on, there were farmers worrying about, if they couldn’t sell it, and the prices are down in the dumps, they might be worried about going out of business. And I think that worry is now taken off the table.”

During most of the last decade, U.S. agricultural exports to China have been between $20 to $30 billion annually. It dropped to less than $10 billion in 2018 because of the trade war.

Under the terms of the trade deal, China will buy an extra $32 billion worth of U.S. agricultural products over the next two years. Some doubt that the number is realistic.

Turner seems to think it’s achievable: “It’s not a huge stretch; I don’t think so. You know when you consider the money and the tariffs and everything that’s involved, you know. Another five or $10 billion in Ag products in the big picture of the trade between us and China is not a big deal.”

Another problem is, because of the trade war, China has shifted its purchases to Brazil and Argentina.

Senate Minority Leader Senator Chuck Schumer (D-NY) said: “It appears the Trump administration has not addressed the fact that China has existing contracts with countries like Brazil and Argentina. They don’t need any more of our products, certainly not the amount that’s been talked about.”

Turner though is still optimistic: “The thing is, with grain markets, the way it works is—you can have a contract with Brazil and Argentina, and the Chinese have a contract with us, they still do sales, or cancel or switch origin all the time.”

He added that China would want the tariffs to come down before a phase 2 deal. But President Trump said on Wednesday, the tariffs will be lifted after the phase 2 deal.