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Phase 1 impact remains uncertain.

What are the U.S.-China Phase 1 trade impacts?

Soybean, corn, rice, cotton, and wheat Phase 1 impacts

Make no mistake, outside the Chinese core leadership no one knows the path China will take to meet their Phase 1 trade commitments, especially agricultural product purchases.

The U.S.-China Phase 1 trade deal was written due to political necessity and was a wakeup call for all U.S. trade partners, like the European Union. Why? Continued policy status quo is no longer acceptable, since any further extension will heavily erode the economic, social, policy, political, and military fabric of the U.S. economy.

Realign policy

Global fiscal, monetary, and trade policy realignment has not kept pace with the explosive global growth in many foreign countries over the past decades, especially China. The United States must realign fiscal, monetary, and trade policy to maintain its global leadership roles and provide meaningful jobs and economic opportunity for its U.S. citizens. 

Today, anyone discussing the U.S.-China Phase 1 trade agreement is likely to overstate or understate near-term expectations of this agreement. That said, this broad complex agreement lays a foundation to grow our fiscal, monetary, and trade relationship with China and other global partners.

U.S. ag expectations

 At this point, new trade activity related to U.S. agricultural exports, due to the U.S.-China Phase 1 trade agreement, is highly uncertain, especially for soybeans, due to the political bargaining power soybean purchases provide China’s leadership. Under the right political circumstance China may make significant purchases. 

This agreement opens the door for a sustained policy negotiation process between the U.S. and China, which is critically important to global economic stability and momentum, but the process will be a laborious journey.

Visualizing soybeans, corn, rice, cotton and wheat fundamentals 

The accompanying supply and demand slide show is important to this article. Key slides, Charts A1-A34, have been replicated and moved to the front of the slide show. The slide show has 150 slides covering soybeans, corn, rice, cotton, and wheat, so download and review.  

Soybeans

  • World Soybean Total Supply. 2019/20 world soybean total supply estimated at 601 million metric tons is the 2nd highest on record, Chart C9.
  • World Soybean Ending Stocks. 2019/20 world soybean ending stocks estimated at 99 million metric tons is the 3rd highest on record, Chart C11.
  • U.S. Soybean Total Supply. 2019/20 U.S. soybean total supply estimated at 122 million metric tons is the 4th highest on record, Chart C13.
  • U.S. Soybean Ending Stocks. 2019/20 U.S. ending stocks estimated at 11.6 million metric tons is the 7th highest on record, Chart C15.
  • South American Total Supply. 2019/20 South American soybean total supply estimated at 259 million metric tons is the highest on record, Chart C17.
  • South American Ending Stocks. 2019/20 South American ending stocks estimated at 59 million metric tons is the 3rd highest on record, Chart C19.
  • China Soybean Ending Stocks. 2019/20 soybean ending stocks estimated at 21.7 million metric tons is the 2nd highest on record, Chart C20.

Corn

  • World Corn Total Supply. 2019/20 world corn total supply estimated at 1.600 billion metric tons is the 2nd largest on record, Chart D5.
  • World Corn Ending Stocks. 2019/20 world corn ending stocks estimated at 297 million metric tons is down from the previous 4 marketing periods but still the 5th highest on record, Chart D7.
  • U.S. Corn Total Supply. 2019/20 U.S. corn total supply estimated at 406 million metric tons is the 4th largest on record, Chart D9.  
  • U.S. Corn Ending Stocks. 2019/20 U. S. corn ending stocks estimated at 48 million metric tons is the 9th highest since 1988, Chart D11.
  • South American Corn Total Supply. 2019/20 South American corn total supply estimated at 188.2 million metric tons is the 2nd largest on record, Chart D13.
  • South American Corn Ending Stocks. 2019/20 South American corn ending stocks estimated at 11.5 million metric tons, Chart D15.

Rice

  • World Rice Total Supply. 2019/20 world rice total supply estimated at 713.9 million metric tons the highest on record, Chart B7.
  • World Rice Ending Stocks. 2019/20 world rice ending stocks estimated at 178 million metric tons the highest on record, Chart B10.
  • U.S. Long Grain Total Supply. 2019/20 U.S all rice total supply estimated at 8.3 million metric tons, Chart B13.
  • U.S. Long Grain Rice Ending Stocks. 2019/20 U. S. all rice ending stocks estimated at 9.5 million metric tons, Chart B14.
  • China Rice Total Supply. 2019/20 China total rice supply estimated at 264 million metric tons is the highest on record, Chart B16.
  • China Rice Ending Stocks. 2019/20 China total rice ending stocks estimated at 118 million metric tons is the highest on record, Chart B18.

Cotton

  • World Cotton Total Supply. 2019/20 world cotton total supply estimated at 245 million bales is the 4th highest on record, Chart E5.
  • World Cotton Ending Stocks. 2019/20 world cotton ending stocks estimated at 82.1 million bales is slightly above the 3-previous marketing periods and the 5th largest on record, Chart E7.
  • U.S. Cotton Total Supply. 2019/20 U.S. cotton total supply estimated at 25 million bales, is the 6th highest on record and the highest in the current 12 marketing periods, Chart E9.
  • U.S. Cotton Ending Stocks. 2019/20 United States cotton ending stocks is estimated at 5.4 million bales, the highest in the current 11 marketing periods, Chart E11.
  • China Cotton Ending Stocks. 2019/20 China cotton ending stocks, estimated at 34 million bales, is the lowest in the current 8 marketing periods, Chart E12.
  • India Cotton Ending Stocks. 2019/20 Indian cotton ending stocks, estimated at 13 million bales, is the highest on record, Chart E13.
  • South American Cotton Ending Stocks. 2019/20 South American cotton ending stocks, estimated at 13.3 million bales, is the highest on record, Chart E14.

Wheat

  • World Wheat Total Supply. 2019/20 world wheat total supply, estimated at 1.22 billion metric tons, is the highest on record, Chart F5.
  • World Wheat Ending Stocks. 2019/20 world wheat ending stocks, estimated at 288 million metric tons, is the highest on record, Chart F7.
  • U.S. Wheat Total Supply. 2019/20 U.S. wheat total supply, estimated at 84.5 million metric tons, Chart F9.
  • U.S. Wheat Ending Stocks. 2019/20 U.S. ending stocks declined from a high in 2016/17’s 32.1 million tons to 2019/20’s 25.6, but remains the 8th highest since 1987/88, Chart F11. 

  Accompanying Fundamental Chart Book Index

  • A1-A35. Global, Select Countries, and U.S. Ending Stocks for Soybean, Corn, Rice, Cotton and Wheat Charts (metric tons)
  • B1-B41. Select World, China, India, and United States Rice (metric tons); U.S. Long and Medium Grain Rice Charts (million cwt.)
  • C1-C20. Select World, U.S., South America, and China Soybean Charts (metric tons)
  • D1-D16. Select World, U.S., South America, and China Corn Charts (metric tons)
  • E1-E14. Select World, U.S., China, India, and South America Cotton Charts (metric tons)
  • F1-G17. Select World, U.S., China, India, Argentina, Canada, European Union, and Ukraine Wheat Charts (metric tons)

Quite simply, the 2020/21 marketing period is shaping up to be a highly challenging business environment, so production, financial and marketing advisors remain critical to one’s 2019 business success.

No crystal ball

Since no one has a crystal ball or knows the future, always consult an investment professional or professionals before making investment decisions. The world’s greatest speculators, investors and money managers are challenged by today’s global business environment.   

Source: Bobby Coats is an economist with the Arkansas Department of Agriculture and is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. robert.coats@agriculture.arkansas.gov

Download Slide Show for charts and expanded details, Click Download Link

DISCLAIMER-FOR-EDUCATIONAL-PURPOSES-ONLY

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