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SDCorn: Despite Hurdles, Ag Trade Making Gains
South Dakota Ag Connection - 05/29/2020

The coronavirus pandemic has hammered the U.S. economy, including exports of agricultural products. However, as countries around the world start to reopen their economies, there is renewed optimism that export markets will rebound. And a strong export market would certainly be a welcome boost to the entire agriculture industry.

"The main story right now is that U.S. corn is competitive and export sales are strong and looking to meet or possibly exceed the USDA forecast for 2019/20 exports," said Ryan LeGrand, president and CEO of the U.S. Grains Council.

There have been some positive steps on the export front recently. As World Trade Month nears an end, let's take a look at some of them.

The U.S. Grains Council, which temporarily closed its offices and directed staff to work from home, reopened its South Korean office and plans to reopen other offices in coming weeks.

China has stepped up purchases of U.S. agriculture products.

A rare U.S. ethanol shipment is expected to arrive in China very soon. Reuters news service says that may be the first ethanol shipment to hit China since the two countries struck a trade deal earlier this year. China recently waived some tariffs on American products, including ethanol, to support more purchases of U.S. farm goods to help meet its obligations in the Phase One trade deal. Tariffs on U.S. ethanol had been as high as 70%.

Chinese buyers bought 136,000 tons of soybeans on May 19 and a total of more than 1 million metric tons over a 2-week period. In early May, China bought 686,000 metric tons of corn. In a 10-week period, gross sales of U.S. corn and pork were up around eight times higher than they were in the same period in 2017, before the start of the U.S.-China trade war. If China follows through on its Phase One trade deal commitment, that will be huge.

Vietnam purchased three bulk vessels of dried distillers grains in a 60-day period. Feed demand for poultry, swine and aquaculture continues to grow in Vietnam. That country also made a policy step that opens up the opportunity to buy U.S. sorghum.

Canada, the No. 2 buyer of U.S. ethanol, will have a clean fuel standard take effect in 2021, which opens up potential demand for increased ethanol sales. Ontario already started to transition to increased ethanol use. And the USMCA trade deal goes into effect July 1.

The Philippines is the No. 6 buyer of U.S. ethanol, with a current 10% ethanol mandate and is considering going to 20%.

The U.S. exported nearly 140 million gallons of ethanol to nearly four dozen countries in March, the latest month that comprehensive statistics are available. That's very similar to the total for March 2019, pre-COVID. We also exported 900 metric tons of distillers grains in March.

Mexico was the big buyer of U.S. corn during the last week of April at 141,000 metric tons, followed by Colombia at 139,600 tons and Saudi Arabia at 110,500 tons. Guatemala bought 76,400 tons of U.S. corn, and Taiwan purchased 74,900 tons.

Although beef and pork exports dropped along with global demand and processing plant closures during the pandemic, exports are still happening at a reasonable rate. Despite the fact that the USDA reduced its annual forecast for pork and beef and exports, it still expects pork exports to be higher than in 2019 and beef exports to be down only about 9% compared with 2019. Many foreign countries prefer cuts of meat that are not popular in the United States so they aren't directly competing with domestic demand. Producers shipped 17,471 tons of pork to China in the week ending April 30, compared with just 3,879 tons in the same week last year, USDA figures show.

As demand for U.S. ag products rebounds in the coming weeks and months, the hurdles to successful trade -- including a strong dollar compared with other currencies -- won't magically disappear. There is still a long way to go in our economic recovery. However, the signs of opportunities and progress are encouraging.

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