2020 Fall Farm Outlook

PAGE 8 2020 Logan County Farm Outlook LINCOLN DAILY NEWS October 28, 2020 E arlier this year, China bought 1.76 million tons of U.S. corn; the largest purchase of American corn in thirty years. Just one of these purchases was worth $232 million. As part of the “phase one” agreement between the two countries, China is in the process of buying $36.6 billion worth of U.S. food, agricultural, and seafood in total between 2020 and 2021. To give some context, a report by Chuck Abbot says that, “the largest sale of U.S. corn on record was 3.72 million tons to the Soviet Union on Jan. 9, 1991, according to USDA. No corn sale exceeded 1.7 million tons in the following years so Tuesday’s sale to China is the largest in 29 years.” Ending stocks for the year are larger than at this time last year. Although grain stocks are dominated by China, India also holds a significant share at 17 percent, as they have been on the receiving end of consecutive record harvests and government procurement. So why is there so much attention being paid to this economic trend? What does it all mean? As the global economy attempts to recover from lockdowns, Chinese firms are struggling with problems of reduced manufacturing capacity. What helps China’s recovery is an overall broader demand for Chinese-made medical products, and China’s factory activity has been steadily increasing over the last few months. But the demand for Chinese-made protective gear will eventually slow down, and the effects of the economic decline will eventually subside. As cited in a report by Gabriel Crossley and Stella Qiu, Wang Jun, chief economist at Zhongyuan Bank, said the data showed government support for the economy has kicked in, which “has boosted domestic demand, especially investment-led demand, which buoyed imports.” Overall, China “bought more soybeans, grains, semiconductors, copper and steel products in September, customs data showed. Analysts expect imports to stay on an improving trend, underpinned by strengthening domestic demand.” CONTINUE X Rising grain prices