Pay attention to the daily grain and oil and understand the core grain and oil market information. In 2018, China and the United States imposed import tariffs on each other's related goods, which triggered nearly two years of Sino-US friction. So far, although there are signs of easing between the two sides, the remaining problems still exist.
Today, Daily Grains and Oils takes you to re-sort out the world's largest ** friction event in history with the agricultural products between the two sides.
The rapid rise of China's economy is unsettling to the United States
Since the beginning of the new century, with the rapid development of China's economy, China has rapidly risen to become the world's second largest economy at an unprecedented speed, and at the same time, the superpower of the United States has also achieved rapid development, and the annual amount between China and the United States is the largest among the world's countries, and has maintained a steady growth momentum.
However, just when the situation was very good, in September 2016, the United States filed a lawsuit with the WTO for domestic support measures for China's agricultural products, arguing that China's support policies for three types of agricultural products, such as wheat, rice, and corn, had affected the export of American agricultural products.
It turns out that although the situation between China and the United States is very good, comparing the data will find that the United States is in a continuous deficit between China and the United States, and the deficit is expanding every year. Looking at the relations between the two sides since the establishment of diplomatic relations between China and the United States, the United States also found an astonishing news:
China's imports of American goods have developed from primary industrial products to only high-end precision instruments, and a large number of industrial products that could have been exported to China are now imported from China in large quantities. Only grain is in a sustained growth momentum in China and the United States.
They dare not imagine that if this model is allowed to continue, what commodities can be exported to China in addition to grain.
Agricultural products in China and the United States
For most ordinary consumers, the Sino-US friction in 2018 happened very suddenly, and there seemed to be no warning, which also led to the failure of many foreign trade factories in the south to prepare in advance in those two years and suffered heavy losses.
Looking back now, if we can pay attention to the promotion of the Belt and Road Initiative and the northward relocation of factories in the south in those years, we may be able to vaguely grasp something. Because among the United States and China, it is agricultural products that are most likely to be the first to have problems, and it is agricultural products that are most unlikely to make China make concessions.
The strategic position of grain in China does not need to be repeated, and for the United States, China is no longer a small country, so it needs to find a reason, obviously in the middle and low-level industrial products have been completely defeated, and China has an urgent need for high-tech products, the only way to come up with agricultural products is to talk about things.
According to the latest China-US data, China's exports to the United States mainly include electromechanical, electronic products, clothing and other livelihood products, with an export value of up to 580 billion US dollars. Among the U.S. exports to China, agricultural products rank second, with a total export value of less than $180 billion.
Naturally, in the 2016 Sino-US agricultural product negotiations, the two sides did not reach an agreement, and then they did not reach an agreement until the negotiations completely collapsed in 2018.
Interestingly, after the full-scale outbreak of Sino-US friction in 2018, many ordinary consumers were surprised to find that China is more like a purely industrial country when they saw the list of additional tariffs imposed on both sides for the first time.
**Unrest in recovery
Recently, U.S. Secretary of Agriculture Tom Vilsack said that although the scale of U.S. grain exports to China has declined due to the continuous purchase of Brazilian corn and soybeans by Chinese buyers this year, he believes that the demand for U.S. grain from China will rise again over time.
According to data from the U.S. Department of Agriculture, as of the week of November 16, Chinese buyers have purchased a total of 1 million tons, far lower than the scale of 3.5 million tons in the same period last year.
Judging from customs data, from January to October this year, the total amount of major grain and oil varieties imported by China from the United States was about 27.94 million tons, a year-on-year decrease of nearly 30%.
However, there are also data showing that Chinese buyers have significantly increased their purchases of U.S. grains and soybeans since October. Among them, the purchase of soybeans reached more than 4 million tons in a week, and the purchase of wheat in October reached 460,000 tons, approaching the historical record of 590,000 tons in July 2020.
In addition, since the harvest of the new season sorghum in the United States in September, Chinese buyers have purchased as much as 300,000-500,000 tons per month, and as of November 16, a total of 2.81 million tons of new season sorghum in the United States have been purchased, compared with only 1.18 million tons in the same period last year.
However, this is not a happy thing for the United States, because after several years of market changes, the United States has found that the excessive dependence of American agricultural products on China and several other markets is not conducive to the development of American agriculture, and the export of American agricultural products should be more diversified.
U.S. agriculture with fading advantages
Data show that before the outbreak of China and the United States, China's annual grain imports from the United States were about 100 billion yuan, but in 2018 and 2019, this value was about 50 billion yuan.
Subsequently, the United States urgently arranged agricultural subsidies of up to $12 billion to help American farmers tide over the difficulties.
But even so, the number of farm bankruptcies in the United States reached 498 in 2018, and further increased to 595 in 2019, the highest level in 8 years, and in 2020, despite the easing of the two sides, there are still more than 500 farms bankruptcies under the influence of other factors such as the epidemic.
Therefore, for the United States, China is its largest grain export destination, and under the existing pattern, once the Chinese market is lost, they cannot find a new alternative market, which is the lesson that the United States learned from the 2018 ** friction: you can't put your eggs in one basket.
Judging from more data, after the peak of grain and oil in China and the United States in 2021, there has been a downward trend again in the past two years. In addition to the rapid growth of Brazil's soybean and corn exports to China, China's development of the African market has also begun to show results since last year.
These changes in the market environment will once again force the United States to readjust its positioning of China's agricultural products.
China is also pursuing diversification of the pattern
In contrast, China's diversification of grain imports has been implemented since 2008.
Up to now, China has set up a Chinese grain business giant led by COFCO International in Brazil, the largest grain importer in Brazil, to ensure that the region's rich agricultural resources and energy continue to flow to China.
In the Black Sea region, imports of Ukrainian grain began in 2012 and continue to be built even after the Russia-Ukraine conflict, with a gradual expansion of imports of sunflower meal from the country.
Around 2020, China's long-term investment in Africa has also begun to pay off, from the first peanuts to last year's corn imports, the growth potential of the region has been revealed.
Of course, on the whole, the current diversification of grain imports is still full of challenges, in addition to the uncertainty caused by regional conflicts, including the protectionism of some countries, which also has a negative impact on the stability of the channel.
In particular, we have noticed that with China's investment in Africa for many years, after gradually improving local planting conditions and Xi, some countries have begun to implement peach picking behavior on our early investment in the region, in the next episode, we will focus on China's agricultural input in Africa, as well as some new risks faced, welcome to pay attention!