Only Time Will Tell

By: Jake Keelen-Brown | jlb7226@psu.edu | 24 October, 2019

Bloomberg magazine reported on Thursday on the potential of a U.S. agricultural exports to China increasing. There is a belief that by next year trade with China can return to the higher demand that farmers were accustomed to before the trade war with the superpower of the eastern hemisphere.

This all hinders on the potential trade deal between the U.S. and China staying on track. If there are no hiccups, China could increase their demand for agricultural products by 20 billion dollars in a year. Of course this only happens if the U.S. is committed to removing the tariffs placed on Chinese goods.

The concerns of not reaching a trade deal have been calmed in the past few weeks. President Trump has nearly assured the country that the first phase of a trade deal will be signed when he travels to China next month. He also expects China’s purchases of agricultural products to raise to 50 billion dollars.

China is too showing good faith in hoping a trade deal gets done. Last week, China issued a purchase for 10 million metric tons of soybeans.

If a phase one of a new trade deal between these two giants is indeed reached next month, the effects would be profound. Farmers would no longer need to be clamoring the President to find a resolution to the ailing agricultural market. The market of the United States would yet again the much needed demand stability that it once had due to the necessity of the Chinese.

A trade deal agreement would have the same level magnitude for the country of China. Right now, China is in a dilemma as the price of pork has soared recently. Being able to now have a portion of China’s pork supply be from the U.S. would greatly help lower the burden for importers.

I firmly believe that next month there will be an agreement reached between The United States and China on the beginnings of a trade deal. As the original intention of any peaceful agreement, both parties will benefit. President Trump will have another accomplishment to proclaim as he seeks re-election and China will have a steady inflow of agricultural products. Only time will tell what the future holds for now we do what we do best in the market; speculate.

Sources:

https://www.bloomberg.com/news/articles/2019-10-24/china-willing-to-buy-20-billion-of-u-s-farm-goods-in-year-one