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Farm export forecasts highlight uncertainties over US-China deal

Over the past years, US president Trump promised American farmers great sales of agricultural commodities to China for two years. That’s unlikely to happen, if you believe the US Department of Agriculture’s forecasts.

A USDA report released last Wednesday claims that exports of farm goods to China are expected at only $18.5 billion in the 2021 fiscal year that starts in October, and at $14 billion in the prior 12 months. This means these forecasts point to a significant shortfall.

China pledged to buy $36.5 billion in US agricultural goods in 2020 and $43.5 billion the following year, figures many traders and analysts have long been sceptical of. The USDA figures indicate that meeting the targets for both years would require enormous purchases in the fourth quarters.

Dan Kowalski, vice president of research at CoBank: “Everybody is just as skeptical as they were a few months ago. There are only a few months left and sales need to come in pretty soon as boats need to be booked and the commodity shipped and you can’t do that at zero notice.”

According to a Bloomberg article, Chinese purchases have fallen behind partly because the coronavirus hurt demand and disrupted logistical operations including the functioning of ports in the Asian nation. Shipments in the first half of the year hit only 20% of the pledge, USDA data showed.

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