Global trade in food and agricultural products grew by 3.5 percent last year, according to the WTO, leading to descriptions that the sector was robust and resilient in the face of the worst pandemic in a century. However, a USDA working paper says the impact of the coronavirus was obscured by such factors as the de-escalation of the Sino-U.S. trade war.
Although China has yet to fulfill its "phase one" promises of mammoth purchases of U.S. farm exports, "the fact is, they need us," said Agriculture Secretary Tom Vilscak during a digital news conference. He added that, with China back in the U.S. market, commodity prices are high enough that, "I'm not sure there's necessarily a need for any trade-related assistance [to farmers] at this point."
U.S. ethanol production plunged 13 percent last year due to the pandemic, costing the industry around $4 billion in sales. But it may recover fully by 2023, on the strength of larger exports and rising domestic use of higher blends of ethanol into gasoline, said the Food and Agricultural Policy Research Institute.
U.S. farmers will respond to high commodity prices by harvesting their largest soybean crop ever and a corn crop that could tie the record set in 2016, projected USDA on Friday. Delivered to a hungry world recovering from the pandemic, the 2021 corn and soybean crops would fetch some of the highest farm-gate prices in years.
U.S. farm income will be a strong $111.4 billion this year, 20 percent above the 10-year average, thanks to a recovery in crop and livestock revenue and larger than usual federal payments, said the USDA. Higher market prices, particularly for corn, soybeans, cattle and hogs, and larger production were forecast to boost farm receipts by $20.4 billion from 2020's level.
China bought a mammoth 5.85 tonnes of American-grown corn last week, including 2.108 million tonnes on the same day that the White House said the "phase one agreement" that de-escalated the trade war was under review. "The national security team, the newly confirmed secretary of state, President Biden are all reviewing all aspects of our national security approach, including certainly our relationship with China," said press secretary Jen Psaki.
The typical Midwestern grain farm could generate more than twice as much income this year as in 2019, thanks to higher market prices and large federal payments, said two University of Illinois analysts. The outlook for the new year is much more dour, especially without new stopgap payments.
Partly because food is indispensable, agricultural trade has been remarkably robust despite the disruptions of the pandemic, said Ohio State professor Ian Sheldon during the university's annual agricultural outlook conference. Inventories of key staples are at high levels worldwide so "there's no reason why a health crisis turns into a global food crisis," he said.
A resurgent U.S. economy will grow at its fastest pace in two decades after this year's coronavirus slowdown, helping to boost commodity prices almost across the board, said the USDA in its first projections for 2021. Growers will harvest a record-large crop of soybeans and the crop will sell for an average $10 a bushel for the first time in seven years, thanks to strong demand.