Although it is likely to fall short of its “phase one” target, China purchased a record $4.8 billion of U.S. food, agricultural and seafood products during October, contributing to the surge in grain and soybean prices, analysts said on Monday. “The big question right now for the grain and oilseed markets is where China’s buying in future marketing years is headed,” said economist Scott Irwin of the University of Illinois.
Soybeans accounted for the bulk of sales, $3.5 billion, in October, according to Census Bureau data. Purchases also included $190 million of corn, $172 million of cotton, $155 million of nuts and $96 million of pork.
Sales to China could total around $24 billion for the year, highest since the start of the China-U.S. trade war, according to the FAPRI think tank at the University of Missouri. The “phase one” agreement obliged China to import $36.6 billion of American food and ag products this year.
“Regardless of where the total ends up, China’s buying has been the main reason for the rally in grain and oilseed prices,” said Irwin on social media. “How the world can change in a few months.”
China’s purchases of $4.8 billion in October broke the November 2013 record of $4.7 billion, said chief economist John Newton of the American Farm Bureau Federation.
After a slow start to the year, China became a steady purchaser in late summer and early fall. It tends to buy at harvest time when prices are lowest. A late-season drought cut into corn and soybean yields, helping to bolster prices at the same time demand was rising for U.S. crops.
From January through the end of October, purchases by China totaled $17.5 billion, according to the Peterson Institute for International Economics. The Washington think tank says there are two ways of monitoring “phase one” for food and ag: $33.4 billion of U.S. exports and $36.6 billion of Chinese imports, which include shipping costs.
At the end of October, Chinese customs data showed “phase one” imports of $15.6 billion since the start of 2020, indicating $1.9 billion of food and ag products were in transit between the nations.
The USDA forecasts that China will be the No. 1 market for farm exports in fiscal 2021, which began on Oct. 1, with purchases of a record $27 billion, largely due to large purchases of soybeans and corn. Exports generate 20 cents of each $1 in cash receipts for farmers. The United States consistently exports more in farm goods than it imports.