Commentary: The Glass Half Full on Ag Trade

By Gary Truitt

The analogy of a glass of water is commonly used to portray optimism or pessimism. An optimist sees a glass of water as half full while a pessimist sees it as half empty. In reality, the glass holds the same amount of water; it is just the perception of the individual looking at it that differs.  Something similar is occurring when it comes to U.S. ag trade. There are those who are pessimistic, focusing on the loss of sales to China. While others focus on exports as a whole, which are on the rise.

U.S. soybean sales to China have declined by almost 90% since the imposition of tariffs by the Trump administration. Sales of pork and other farm commodities have also fallen sharply. Yet, overall ag exports are on the rise.  In the first 9 months of this year total U.S. farm exports have totaled $108 billion up 6%. Projections are that, by the end of the year, total sales will reach $150 billion — the second highest level in history. The latest USDA figures show total soybean sales are up 9%, the value of U.S. corn exports up 23%, beef up 11%, dairy up 5%, and ethanol up 15%.  So, depending on your perspective, the trade glass is either half full or half empty.

For me, the factor that determines who is right, the optimists or the pessimists, is the trend. Is that glass getting fuller or emptier? While China and the U.S. remain deadlocked on key trade issues, many other nations are entering into talks with the U.S. about increasing imports of food products.  Korea, Japan, India, several SE Asian nations, and several countries in Africa have all met with U.S. ag trade delegations recently to begin discussions.   These potential markets represent a diversification of overseas markets U.S. farmers may soon have. This is a trend that more and more ag leaders are coming to see as a good thing.

A year from now it is quite possible we will be no closer to resolving our trade dispute with China, but it is quite likely we will have a new trade agreement with Japan, a signed FTA with Canada and Mexico, and be negotiating with several other nations. It is even possible that our volatile commodity futures market, controlled by the big money funds on the East Coast, will begin to feel a bit more confident in ag trade and begin to buy back their long positions in the market.  The President’s trade policy is abrupt and disruptive.  Yet the goal of  more balanced and fair trade deals is one that will benefit farmers in the long run.

Slumping corn and soybean prices as well as caustic and inflammatory news headlines might give you the impression that the ag trade glass is half empty. However, when you look at the trends and projections for the near future, you may view the state of U.S. ag trade a bit more optimistically.