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ANALYSIS: China to buy much less agricultural product than expected, says US


There’s good news and bad for US farmers in 2020.


The bad is that the US Department of Agriculture now expects China to buy much less than the average $40bn annually of American agricultural products it pledged to buy mid-January.


The good is that China is now expected to spend almost $4bn more (a total of some $14bn) this year than it did in 2019 on US agricultural imports, according to Robert Johansson, the USDA’s chief economist.


Coronavirus dents projections


The unexpected hazard of the coronavirus outbreak, which has paralysed much of China’s economic activity, has, said Johanssen, thrown off course earlier assumptions about China’s agri-imports from the US. "We would have expected China to start buying more immediately, but coronavirus has pretty much shut down their economy for the first quarter," he said yesterday.


The much higher spending on agri-imports - part of a US-China trade agreement signed January 15 which Donald Trump said would see China import an extra $200bn of US products over the next two years - was widely doubted at the start.


It now looks certain to fail.


Is the virus coming to an end?


The USDA bases its forecasts on known data trends so in a sense the outlook for Chinese purchases of US agri-commodities must surely only improve - so long as Covid-19 begins to ease.


On that score, Zhang Hanhui, China’s ambasador to Russia, has now said: "We can win a complete victory over this virus," at a meeting with Ivan Melnikov, first deputy speaker of Russia’s lower house of parliament. "Outside of Hubei, in other regions, we can win this victory already this month. And in the centre of the epidemic, the disease will be liquidated next month," he added.


The virus may be defeated or it may have further to run. Either way, with US farmers planting an additional 4m or so acres of corn this spring and almost 9m more acres of soybeans than in 2019, they should be well positioned to take advantage of any upsurge in Chinese imports, when - and if - they materalise.



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