U.S. farmers plow ahead with plantings as China trade war fears ebb

[May 22, 2018]   By Tom Polansek

CHICAGO (Reuters) - U.S. farmers said they would push ahead with plantings planned before U.S.-China trade tensions eased and, now that the two countries have resumed talks, take a wait-and-see approach to President Donald Trump's promises for more sales to China.

Over the weekend, the world's two largest economies pledged to keep talking about how China could import more energy and agricultural commodities from the United States to narrow a $335 billion annual U.S. goods and services trade deficit with Beijing.

The agreement came after Trump threatened to impose up to $150 billion in punitive tariffs to lower the trade deficit and combat what he calls Beijing's misappropriation of U.S. technology. China threatened equal retaliation, including tariffs on some of its largest U.S. imports, including soybeans and other agricultural commodities.

The reluctance of some farmers to adjust their planting plans in light of the latest negotiations shows they are uncertain about the outcome. For many, it is also simply too late to change their minds after buying seed, fertilizer and farm chemicals.

"We're so far along in our planting season that we can't change anything," said John Brink, who grows corn, soy and wheat in Richview, Illinois.

As of Sunday, farmers had planted 81 percent of the U.S. corn crop, 56 percent of the nation's soybeans and 36 percent of sorghum, a grain used for livestock feed, according to U.S. Department of Agriculture data issued on Monday.

"Until we see some hard evidence that some major concessions have been made or whatnot, we're kind of taking a wait-and-see approach," Brink said. "We just kind of understand this is politics in play."

The United States appeared to have won promises of more imports by China, although there were few specifics on Monday.

Farmers said they wanted more details.

"The news is encouraging, but a lot of us on the farm would like to hear some contracted sales that have been placed," said Monte Peterson, a soybean farmer in Valley City, North Dakota.

Kirby Hettver, who was wrapping up soybean planting on his farm in DeGraff, Minnesota, said he wanted to see a long-term deal in place before he makes any changes on his farm in response to trade policies.

Corn is seen in a field in Morocco, Indiana, U.S. September 6, 2016. REUTERS/Jim Young/File Photo

"I view it as part of the process," Hettver, president of the Minnesota Corn Growers Association, said of the latest stage of the U.S.-China talks.

"Our plan for this year was already in place. We had seed bought, fertilizer bought."

HOPE FOR REDUCED TARIFFS

The U.S. Grains Council, which promotes U.S. exports, would like China to speed up import approvals of U.S. biotech crops such as corn and reduce tariffs on shipments of U.S. ethanol and an ethanol byproduct known as distillers' dried grains, Chief Executive Tom Sleight said.

On Friday, China dropped an anti-dumping investigation into U.S. sorghum that had raised costs for buyers of the grain.

As a result, the Grains Council may dial back plans made during China's investigation to find more buyers in other countries for U.S. sorghum, Sleight said.

"We may be not quite so aggressive now because China could come back as a huge buyer," he said. "You don't want to build a big market and then not have something to deliver."

The United States shipped 4.76 million tonnes of sorghum to China in 2017, worth around $1.1 billion and making up the bulk of China's roughly 5 million tonnes of imports of the grain, according to Chinese customs data.

Some U.S. farmers scrapped plans to plant sorghum this spring, opting for corn instead, after China's probe halted U.S. sorghum imports.

But Kent Winter, who farms outside Wichita, Kansas, and is president of the Kansas Grain Sorghum Producers Association, was planning to double his sorghum plantings when the latest trade talks were announced. He will plant the crop across about 400 acres in about three weeks, hoping that China resumes U.S. imports soon after ending its anti-dumping probe.

"It gives us more confidence going forward that we can get this foreign market opened back up," Winter said.

(Reporting by Tom Polansek; Editing by Richard Chang)

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