At the start of 2020 US President Donald Trump signed a trade deal with China, intended to draw an end to the sporadic tit-for-tat trade war between the two countries. The consensus is that it was moderately successful, in that many US tariffs on Chinese imports were either lifted or not implemented. As part of that deal China undertook to substantially raise its imports of US agricultural goods.
The playing field was however rougher than expected, not least because China was still emerging from a nationwide outbreak of African Swine Fever, which probably cut its pig herd in half to around 200m head. 2020 saw China attempt rapidly to re-stock its depleted pig population – pork is the preferred meat in China. China, which cannot grow enough soybeans for its own needs, was in 2020 forced to import vast quantities of soybeans (to turn into soymeal, the preferred animal feed for pigs) and also corn, largely from the US. One consequence of this vast import demand was to push up US soybean and corn futures by some 50%.
This white paper was written by Gary Mead, Lead Analyst at Agrimoney, and Yoke Wong, Senior Analyst at our sister service for the feed additives industry, Feedinfo. The question Gary and Yoke consider is – will China have the same import needs this year? The 2020 trade deal was meant to last two years – but given the new President, Joe Biden’s administration has already sparked hostility from China over its suggestion that China’s treatment of its Uighur minority amounts to ‘genocide’, there must be a strong doubt that it will last the course, let alone be renewed.
In addition to this report, Gary Mead and Yoke Wong discussed the impact of grain imports and export in China for the feed additives industry. Watch the 10-minute video: