LOOKING BACK ON A MEMORABLE MARKETING YEAR FOR THE U.S. GRAIN SORGHUM TRADE TO CHINA
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ugust 31, 2021 marked the end of the 2020/21 marketing year, and with it came an opportunity to look back on how the past twelve months com pared to recent marketing years, particularly in terms of trade with China. Over the last eighteen months, lots of energy – some political, some purely economic – has been dedicated to grading the Phase One agreement with China as a success or failure. Many of these assessments were premature, coming less than halfway into the two-year agreement. As we near the end of the second calendar year – and with one full marketing year represented as well – though, we can now make more comprehensive judgments on the agreement’s impact on U.S. agricultural trade with China. For many commodities, particularly sorghum, it’s difficult to render anything but a positive grade for the Phase One agreement. As we’ll break down below, the 2020/21 marketing year saw sales and exports of U.S. sorghum into China move at a pace that rivaled some of our strongest marketing years on record. While we can give the Phase One agreement credit for thawing once-tense diplomatic relations and allowing trade to return, for a commodity like sorghum the robust trade over the last twelve months can be attributed more to high demand than any structural changes or purchase requirements contained in the Phase One agreement.
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Ag Mag THEAGMAG.ORG
BY PATRICK WADE
As China continues to rebuild its decimated swine population following the African Swine Fever, the country has been relentless in securing massive amounts of feed grains. At its peak in 2014, China slaughtered 735,100,000 heads of hog. In 2020, it was all the way down to 460,000,000 and has been estimated to rise to just 520,000,000 in 2021, still well below peak years. Furthermore, this rebuild is doubling down on feed grains due to recent changes to swine industry practices about feeding leftover food scraps to hogs. That practice was identified as a vector for the spread of African Swine Fever, so even more feed grains will be needed in order for the industry to truly recover. This strong demand, coupled with dwindling state reserves driving domestic corn prices to premiums well above U.S. imports, led China to prioritize imports to meet demand challenges. Multiple U.S. commodities have seen substantial increases in imports to China as part of this trend, but sorghum is one of the few that already had unimpeded access to the Chinese market – no tariff rate quotas or other structural barriers limiting its access. So taking those factors into account, how did the U.S. sorghum exports to China in the 2020/21 marketing year stack up to past marketing years? In nearly all metrics, it’s clear this was one of the strongest marketing years on record.
