Tag Archives: China

COLBY, Kan. — The trade conflict between the United States and China, which began brewing early last year pulled U.S. corn prices down an average $0.20 per bushel per month in the first six months of 2019, according to a Kansas State University agricultural economist.

“Since December 2018, U.S. corn prices had been moving in a pattern contrary to a normal seasonal price pattern found in Kansas, with essentially no seasonal price increases,” said Dan O’Brien, K-State Research and Extension agricultural economist in a report released May 17.

Seasonally, corn prices tend to move higher during the spring and summer when the crop is planted and growing and often come down during the fall harvest when the new crop is available to the market.

Much of the focus in recent months has been on how the trade tensions have cut soybean exports to China, pushing soy prices lower, O’Brien said, but the potential spillover effect is that U.S. farmers will plant fewer acres to soybeans this year and instead plant more corn.

“And that sentiment has held sway among the corn trade until recently in mid-May 2019 when 2019 U.S. corn planting problems became serious enough to cause corn futures prices to begin trending higher,” he said, referring to unusually wet spring weather which delayed planting in some areas.

After analyzing data, O’Brien said that from January to May this year, U.S. corn prices were $0.07 to $0.34 per bushel under levels they would have been if normal, seasonal average price patterns – those that are typically seen in Kansas – had prevailed.

Market perceptions about the trade negotiations seem to have had a negative effect on U.S. corn markets, said O’Brien, citing trader data from the Commodity Futures Trading Commission that confirmed a bearish “short” sale aggregate position of speculative traders that started in January 2019 and trended to record bearish levels in April. Someone with a “short” position in the futures market makes money as the price of a commodity declines.

The U.S. Department of Agriculture also increased its projected U.S. corn ending stocks-to-use to 14.45% in May 2019 from 11.85% in January for the corn crop harvested last year. During that time, the only changes affecting supply and demand were on the usage side, with market expectations for U.S. corn use declining, he said. USDA also projected this year’s average corn price in May at $3.50 per bushel, down $0.10 from its projection in February.

Further, China may be eyeing Brazil’s crop as it moves away from buying U.S. corn.

“The success of the 2019 Brazilian second corn crop also contributed, likely in a sort of ‘piling on’ negative, confirming manner,” O’Brien said.

With the trade dispute ongoing even as farmers are planting this year’s crop, he said, CFTC data indicate traders are beginning to focus more on planting concerns linked to weather-related delays, with some speculators moving away from short positions and toward the long side, indicating they think prices may go up. It remains to be determined, however, if the trade conflict will continue to weigh on the market to the same degree that it did through mid-May.

More information is available on the K-State agricultural economics website www.agmanager.info

Hong Kong retiree Lee Wai-man loves pork fresh from the market but eats a lot less now that the price has jumped as China struggles with a deadly swine disease that has sent shockwaves through global meat markets.

China produces and consumes two-thirds of the world’s pork, but output is plunging as Beijing destroys herds and blocks shipments to stop African swine fever. Importers are filling the gap by buying pork as far away as Europe, boosting prices by up to 40% and causing shortages in other markets.

“I’m a fresh-pork lover, but it’s too expensive,” Lee, 87, said as she shopped at a Hong Kong market.

African swine fever doesn’t harm humans but is fatal and spreads quickly among pigs. It was first reported in August in China’s northeast. Since then, 1 million pigs have died and the disease has spread to 31 of China’s 34 provinces, according to the U.N. Food and Agriculture Organization.

The outbreak’s scale is unprecedented, said Dirk Pfeiffer, a veterinary epidemiologist at the City University of Hong Kong.

“This is probably the most complex animal disease we have ever had to deal with,” Pfeiffer said.

China’s shortfall is likely to be so severe it will match Europe’s annual pork output and exceed U.S. production by 30%, industry researchers say.

“Everyone wants to import as much pork as possible,” said industry analyst Angela Zhang of IQC Insights. She said the trend is likely to accelerate as Chinese production falls.

That’s a boost for farmers in Germany, Spain and other countries with healthy pigs but hard on families in Southeast Asia and other poor markets that rely on pork for protein.

This year’s Chinese pork output might fall by up to 35%, according to Rabobank, a Dutch bank.

Global supplies will be “redirected to China,” the bank’s researchers said in an April report. It said the “unprecedented shift” in trade will likely cause shortages in other markets.

Grocery shoppers in Germany, Japan and other high-income markets grumble at paying more for kielbasa or tonkatsu, but short supplies are a serious concern in places such as Cambodia where pork is the only meat many families can afford.

Cambodia’s live hog price jumped 37% in the past six months, according to Srun Pov, president of the Cambodia Livestock Raiser Association. He said the country is buying about 30% of its daily needs of 500-600 tons from Thailand.

“Pork is important to us,” said Chhe Pich as a butcher weighed her purchase in the Cambodian capital, Phnom Penh. “Even though the current price is a bit high, I have to buy it to serve my family.”

The U.S. Department of Agriculture expects China’s pork imports to soar 41% this year over 2018 to 2.2 million tons. There’s no immediate end in sight as “evidence mounts that China will be unable to eradicate ASF in the near-term,” it said in a recent report.

The jolt to the global meat industry highlights China’s voracious demand for food for its 1.4 billion people, the potential for wider disruptions if its own production falters and its growing ability to outbid other customers for supplies.

African swine fever was first reported in August in China’s northeast. Since then, 1 million pigs have died and the disease has spread to 31 of China’s 34 provinces, according to the FAO.

Outbreaks have been reported in Cambodia, Mongolia, South Africa and Vietnam.

It’s been found among a small number of wild boars, which can spread the disease, in Russia and seven European countries.

Yang Wenguo, a farmer in Jiangjiaqiao, a village a two-hour drive northeast of Beijing, said he has lost 800 pigs. He now has a few dozen.

Most of Yang’s pens are empty. White pus drips from blood-shot eyes of one surviving hog. Foam drips from another’s mouth. Smaller pigs cough.

Yang dosed his animals with government-subsidized medications but they kept getting sick. The government hauls away dead animals and pays compensation of 1,000 yuan ($145) for a sow and 20 yuan ($3) for a piglet.

“You buy pigs, then they all die,” he said, walking on ground covered in disinfectant that looks like dirty snow. Only about 60 to 70 pigs remain from total herds of about 3,000 in Jiangjiaqiao.

Four other families in the village that raised pigs have stopped, Yang said, “No one can bear losing all the pigs they raise.” He’d like to sell his farm and find work in the city but no one wants to buy.

The USDA forecasts China’s total hog herd will shrink by 18% this year to 350 million animals, the lowest level since the 1980s.

In Hong Kong, authorities destroyed 6,000 pigs at one slaughterhouse after an animal imported from the mainland was found to be infected.

“More and more customers are switching from roast pork to other roast meat like chicken and duck,” said restaurant owner Siu Si-man.

Chinese authorities respond to outbreaks by temporarily banning shipments of pigs from any province where a case is reported.

That has caused retail prices to spike in big cities cut off from supplies. Prices paid to farmers have collapsed in areas with a surplus of pigs they can’t export.

A half-hour drive from Yang’s farm, Wang Lijun breeds his own piglets to avoid buying infected animals. His herd shrank from 160 to 170 animals to about 20 to 30 but none died this year.

“All farmers are cutting production,” he said, walking past a row of cages holding pregnant sows.

The number of sows needed for breeding had fallen 19% from a year ago by the end of February, which suggests supply will plunge through next year, the USDA forecasts.

“China’s herd-rebuilding will be slow and take years,” said Rabobank.

In Vietnam, the government said in mid-May that 1.2 million pigs, or about 5% of its total herds, had died or been destroyed. Rabobank expects Vietnamese pork production to fall 10% this year from 2018.

China’s biggest foreign pork supplier is Spain, which accounts for 20% of imports. Germany supplies 19.5% and Canada 16%.

Spanish exports of pork and other pig products to China jumped 32.8% in the first two months of 2019 from a year earlier to 117 million euros ($131 million), according to Interporc, a Spanish industry group.

“My suppliers have told me that they are going to raise prices at the end of the month because of what is happening in China,” said Jordi Nargares, a butcher in a working class neighborhood of Barcelona.

U.S. pork sales to China have been disrupted by Beijing’s tariff war with the Trump administration over trade and technology.

Chinese buyers canceled orders for 3,300 tons of American pork the week of May 6, according to the USDA.

Chinese companies are investing in farms and food processors abroad to capitalize on strong demand. New Hope Group, one of China’s biggest agribusiness groups, said it plans to invest 1.1 billion yuan ($170 million) in three pig-breeding farms in Vietnam.

U.S. Senator Ben Sasse, an outspoken trade advocate and a China hawk, issued the following statement regarding the Trump Administration’s deal to lift steel and aluminum tariffs on Canada and Mexico.

“China is our adversary; Canada and Mexico are our friends. The President is right to increase pressure on China for their espionage, their theft of intellectual property, and their hostility toward the rule of law. The President is also right to be de-escalating tension with our North American allies. Today’s news that the Administration is dropping steel tariffs on Canada and Mexico is great for America, great for our allies, and certainly great for Nebraska’s agriculture industry.”

WASHINGTON, D.C., May 10, 2019 – The Trump administration today indicated it is planning a trade relief package in response to the U.S. trade dispute with China. The following statement may be attributed to David Herring, a pork producer from Lillington, North Carolina and president of the National Pork Producers Council:

“U.S. pork has suffered from a disproportionate share of retaliation due to trade disputes with Mexico and China. This retaliation turned last year — which analysts had forecast to be profitable — into a very unprofitable time for U.S. pork producers. The financial pain continues; the 20% punitive tariff on pork exported to Mexico alone amounts to a whopping $12 loss per animal.

“While there is no substitute for resolving these trade disputes and getting back to normal trade, NPPC welcomes the offer of assistance from President Trump. We stand ready to work with the USDA to facilitate U.S. pork exports as food aid to a number of nations. This assistance should not cannibalize commercial trade. Rather, it should help people in need who otherwise would not have access to this high-quality U.S. protein.

“Pork producers have been innocent bystanders in these trade disputes. Unlike most of the population, they have suffered severe economic dislocations as a result of trade disputes.  It is fair and right that the U.S. government purchase significant quantities of pork over the next 18 months to ship as food aid to help ease the financial burden placed on producers.”

A new report says a nearly $200 million decline in Nebraska’s agricultural exports in 2017 was driven by President Donald Trump’s threats to impose tariffs on U.S. trading partners.

The Nebraska Farm Bureau report attributes the drop to decreases in soybean and corn exports, while beef and pork exports both increased in 2017.

The bureau’s senior economist, Jay Rempe, says Trump’s talks of tariffs in January 2017 caused a decline in soybean and other commodity prices. Rempe points out that China’s retaliatory tariffs didn’t occur until May 2018.

The findings come as Trump imposed his latest tariff hike on Chinese goods Friday. Beijing vowed retaliatory measures.

Rempe says Nebraska’s agricultural community will continue to face pressure unless the administration resolves its trade disputes with China, Mexico and other countries.

Washington, D.C. (May 10, 2019) –Today, the U.S. Trade Representative moved forward with increasing the tariff rate from 10 to 25 percent on $200 billion worth of Chinese goods. Farmers across the country are extremely concerned by the actions taken today by President Trump and his Administration. The National Association of Wheat Growers, the American Soybean Association, and the National Corn Growers Association were expecting a deal by March 1 before farmers went back into the fields but today saw an escalation of the trade war instead. The three commodities represent around 171 million of acres of farmland in the United States.

“U.S. wheat growers are facing tough times right now, and these additional tariffs will continue to put a strain on our export markets and threaten many decades worth of market development,” stated NAWG President and Texas wheat farmer Ben Scholz. “Further, members from both sides of the aisle and Chambers have reservations about the Section 232 tariffs in the U.S.-Mexico-Canada Agreement. Today’s announcement adds on another political barrier, which may hinder Congressional consideration of the Agreement.”

“We have heard and believed the President when he says he supports farmers, but we’d like the President to hear us and believe what we are saying about the real-life consequences to our farms and families as this trade war drags on,” said Davie Stephens, soy grower from Clinton, Ky., and ASA President. “Adding to current problems, it took us more than 40 years to develop the China soy market. For most of us in farming, that is two thirds of our lives. If we don’t get this trade deal sorted out and the tariffs rescinded soon, those of us who worked to build this market likely won’t see it recover in our lifetime.”

“Corn farmers are watching commodity prices decline amid ongoing tariff threats, even while many can’t get to spring planting because of wet weather. Holding China accountable for objectionable behavior is an admirable goal, but the ripple effects are causing harm to farmers and rural communities. Farmers have been patient and willing to let negotiations play out, but with each passing day, patience is wearing thin. Agriculture needs certainty, not more tariffs,” said NCGA President Lynn Chrisp.

Growers have been reeling for almost a year now after the President first imposed a 25 percent duty on $50 billion worth of Chinese goods in July 2018, and later, a 10 percent duty on an additional $200 billion worth of Chinese products, which resulted in the retaliatory tariffs on U.S. goods. These are having a compounding impact not only on agriculture but all industries across the United States.

Canada has used a major World Trade Organization gathering to demand China deliver evidence that Canadian canola is contaminated.

Stephen de Boer, the Canadian ambassador to the world’s leading trade body in Geneva, told the WTO’s general council on Tuesday that Canada wants to meet in China in good faith to hear its science-based concerns that recent Canadian canola shipments were, in fact, tainted.

China banned shipments from two Canadian canola companies last month. This week, the government announced China had similarly banned pork from two Canadian companies.

De Boer’s intervention at one of the WTO’s most senior decision-making bodies is an attempt to push China, which has stonewalled requests for Canadian experts to travel to the People’s Republic to examine Chinese evidence on the canola.

The government says two separate inspections by the Canadian Food Inspection Agency have turned up nothing, while several cabinet ministers have said China’s complaint about the quality of the canola shipments is not science-based.

China’s rejection of Canadian food products is part of the escalating tensions following the RCMP’s December arrest in Vancouver of Huawei Technologies executive Meng Wanzhou on a U.S. warrant alleging fraud.

Meng’s arrest infuriated China. Nine days later, China imprisoned two Canadians — ex-diplomat Michael Kovrig and entrepreneur Michael Spavor — and accused them of violating China’s national security. Both are still in custody.

While de Boer’s statement is not the formal complaint that Conservative Leader Andrew Scheer has urged the government to launch, it represents the first formal opportunity to draw attention to the issue in front of a major meeting of the WTO, said a senior Canadian government official, who was not authorized to speak on the record because of the sensitivity of the situation.

China places great importance on being a member in good standing of the WTO, the world’s trade referee, especially as it tries to displace the United States as a global trade leader.

De Boer told the WTO council that Canada wants to be a good trading partner and if another country identifies a problem with a Canadian export, then it wants to find a solution.

Canada has been working hard to resolve this issue with China using every available means on the ground in China and in Canada, said de Boer.

“But to do so we need to fully understand the problem and that’s why it’s important for them to show us the evidence,” said the senior Canadian government official. “Open and predictable rules-based trade is the cornerstone of international commerce. These are tough and difficult moments but it’s frank and open dialogue while standing up for Canadian values and interests that will resolve them.”

While Canada was pressing its case at the WTO, a Nova Scotia cabinet minister said the federal government would welcome American influence to resolve the ongoing dispute with China.

“I would say that it would be helpful, for sure,” Rural Economic Development Minister Bernadette Jordan said in an interview. “It’s different times now in the world than we’ve faced even four years ago. We see challenges all around the world. And we will continue, as a government, to stand up for our Canadian products.”

The halting of canola and pork imports has also raised the possibility that China could expand what is widely seen as economic retaliation into other areas.

Conservative MP Randy Hoback recently told the House of Commons agriculture committee he’s concerned China might decide to single out Canadian maple syrup or seafood.

Jordan said her constituency is the largest lobster-producing riding in the country, and hardly a day goes by without her talking to a fisher.

In 2017, Canada exported 10 million kilograms of live lobster to China.

Canada’s efforts to diversify its markets for seafood continue apace with the ratification of free-trade deals with the European Union and the 10 Pacific Rim countries in the Comprehensive and Progressive Trans-Pacific Partnership, she said.

“Yes, China accounts for a significant portion of our lobster sales — our seafood, it’s not just lobsters. But I think with the ability for us to open up Europe, our ability to open up other Asian markets, there is that potential to make sure that those challenges are mitigated.”

Jordan stressed there has been “absolutely no indication” of any movement by China to take trade action against Canadian seafood.

While she offered few details of what contingency plans the government may have if China does hit the seafood sector, Jordan suggested the government would come to its aid if necessary.

“We’ve worked with the canola farmers specifically on a package for them. I’m sure that when the time comes, if there’s a need, we will be there for our fishers as well.”

Last week, the government helped canola farmers by changing a special agricultural program that advances money against later crop sales. The change raises loan limits to $1 million from $400,000. The interest-free portion of that program is also rising to $500,000 from $100,000.

Agriculture Minister Marie-Claude Bibeau told The Canadian Press the government wants to ensure producers “have the support they need” and officials are “dealing with issues that arise on a case-by-case basis.”

Trade officials from China are in Washington, DC this week as the Trump administration places further pressure on China to reach an agreement with the United States.

Trump will increase tariffs on China Friday, saying talks between the two nations are going too slowly. On Twitter, Trump states he will increase tariffs on $200 billion of goods from 10 to 25 percent. Trade organization Tariffs Hurt the Heartland says the move would cost nearly one million American jobs, and “increase the likelihood of retaliation on American farmers.” China and the U.S. meet this week in what was expected to be the final round of formal talks.

Trump is expected to host his Chinese counterpart Xi Jinping in June, with the expectation the two would sign an agreement. A spokesperson for China’s Foreign Ministry said Monday the negotiations held so far between the two sides have achieved positive progress, adding, China hopes the U.S. will work to “meet each other halfway and strive for a mutually beneficial agreement on the basis of mutual respect.”

Optimism is growing that the U.S. and China could wrap up a trade agreement this month. Trade officials from the U.S. and China concluded talks in Beijing Wednesday with another critical round scheduled for next week in the United States.

The Trump administration has appeared to be ready to walk away if an agreement isn’t reached soon. However, Treasury Secretary Steven Mnuchin said on Twitter that he and Trade Representative Robert Lighthizer concluded “productive meetings” this week. The South China Morning Post reports that the U.S. has dropped the demand that China halts alleged instances of commercial cyber theft, to bring an end to the long-running tariff dispute.

A deal at this point between the U.S. and China is expected in Mid-May, with a possible signing of the agreement planned for June. However, an agreement doesn’t mean an end to tariffs. The U.S. is planning on keeping some tariffs on China, and China will likely keep retaliatory tariffs on U.S. agricultural products, according to a Chinese trade expert.

Chinese President Xi Jinping promised Friday to set high standards for Beijing’s sweeping infrastructure-building initiative as fellow leaders praised the effort despite worries it leaves some developing countries with too much debt.

Xi avoided mentioning debt in a speech at a Belt and Road forum celebrating his signature foreign initiative. But he promised changes in response to complaints about costs and possible corruption and environmental damage.

Beijing wants “open, green and clean cooperation” with “zero tolerance for corruption,” Xi said.

Developing countries have welcomed the initiative, launched in 2013, to expand trade by building roads, ports and other facilities from Asia through Africa and the Middle East to Europe. But some governments are struggling to repay Chinese loans, fueling complaints poor countries are being pushed into a “debt trap.”

The United States, Japan, India and Russia also chafe at the expansion of Beijing’s influence through building trade and political networks centered on China.

Despite that, Russian President Vladimir Putin on Friday praised the initiative, saying it dovetails with the goals of a Russian-promoted market with four of its neighbors, the Eurasian Economic Union.

Malaysian Prime Minister Mahathir Mohamad, who had suspended plans for a Chinese-built railway and other projects due to their cost, said he was “fully in support.”

Prime Minister Imran Khan of Pakistan, one of China’s closest allies, said Belt and Road has produced “substantial progress” in increasing power supplies and other areas.

The U.N.’s secretary-general, Antonio Guterres, said Belt and Road projects could help turn the balance in mitigating climate change.

Xi’s government is trying to revive the initiative’s momentum after the number of new projects plunged last year. That came after Chinese officials said state-owned banks would step up scrutiny of borrowers and some governments complained projects do too little for their economies and might give Beijing too much political influence.

Other countries including Thailand and Nepal have canceled or scaled back projects, while Ethiopia and others have renegotiated debt repayment.

Xi promised changes to forestall corruption and environmental damage. He tried to allay worries Beijing reaps most of the economic benefits and is gaining political influence.

Belt and Road is “not an exclusive club” and promotes “common development and prosperity,” Xi said. He said Belt and Road will embrace international standards for project development, purchasing and operations.

China’s Ministry of Finance issued “debt sustainability” guidelines Thursday for assessing debt risks to borrowers. The ministry said they are based on standards of the International Monetary Fund and other international institutions.

The guidelines are intended to “prevent and solve debt problems,” said Finance Minister Liu Kun. They will classify countries as high, middle and low risk based on productivity, economic growth and other factors.

The standard “may help reduce the financial stability risks” faced by some borrowers, but that “will depend on how widely it is applied,” said Moody’s Investors Service in a statement.

Other leaders attending the forum included Aung San Suu Kyi, state councilor for Myanmar, Ethiopian Prime Minister Abiy Ahmed and leaders or envoys from Germany, Italy and Greece.

Xi said Beijing wants to encourage cooperation on health, water resources, agriculture and technology. He promised scholarships for students from Belt and Road countries.

Chinese lenders have provided $440 billion in financing, the country’s central bank governor, Yi Gang, said Thursday without giving details on repayments or risks of defaults.

In addition, some 500 billion yuan ($75 billion) has been raised in Chinese bond markets, according to Yi.

The United States, Japan and other wealthy countries also finance construction in a region the Asia Development Bank says needs $26 trillion of investment through 2030 to keep economic growth strong.

In March, Italy became the first member of the Group of Seven major economies to sign an agreement to support Belt and Road.

Belt and Road countries also include many of the poorest and most indebted in Africa and Asia.

About one-quarter of the 115 governments that have signed agreements to support the initiative have foreign debt equal to at least 75% of their annual economic output, according to Moody’s. Mongolia is the most extreme at 240%. Egypt, Indonesia and Pakistan all are above 50%.

None is in immediate danger of default, but Belt and Road economies tend to have higher debt than average, weaker financial flows and more vulnerability to economic shocks, said Lillian Li, a Moody’s vice president.

Borrowing “more external funds will be more dangerous to themselves as well as to the lending countries,” Li said in an interview.

There’s a limit to how much Xi’s government might change the initiative because Beijing still wants to increase its influence and generate work for Chinese industries, Tom Rafferty of the Economist Intelligence Unit said in a report ahead of Friday’s forum.

One element to watch will be whether Beijing tries to enhance the appeal of Belt and Road by making it more like the World Bank or other multinational organizations, he said.

“This has the potential to generate further tensions with the U.S.,” Rafferty said.