Ag Secretary Sonny Perdue and U.S. Trade Representative Robert Lighthizer released a statement on Tuesday saying that progress has been made by China to begin implementing agriculture-related commitments of the Phase One trade deal. Commodity purchases though, particularly soybeans, are likely not happening anytime soon while the Chinese economy, and the global economy, continues to reel from COVID-19, or the coronavirus.
Arlan Suderman, Chief Commodities Economist for INTL FCStone, says while the Hubei province in China, where the coronavirus originated, was very slow to react allowing this rapid spread, there is cautious optimism that the rest of China is containing the virus.
“If it is contained, then I think confidence will grow that China has moved past it. The Chinese economy will jump start again with lots of stimulus, perhaps interest in buying more commodities and products.”
If that happens, Suderman says U.S. products should be included.
“Initially, we can anticipate it would be pork. We have seen continued strong shipments of pork to China to this point. Very impressive shipments, but the ports are really getting backed up and there’s a real shortage of the refrigerated containers used to ship that pork over to China. That is a limiting factor.”
Suderman added some additional possibilities, saying, “I think there was some good interest in distillers grains prior to the coronavirus outbreak, but the containers that distillers grains are shipped in are also trapped inside of China. We need to see some of that free up and come back, and some confidence in the markets once again. I do not see any soybean interest anytime soon, but there could be some corn, poultry, maybe ethanol, and wheat demand coming out of China once they feel like they are getting back to more normal conditions.”
You can hear more from Suderman on this and the rest of his market analysis in the HAT Morning Edition podcast by clicking the play button below.