Last week’s meeting between President Donald Trump and Chinese President Xi Jinping may have some benefits for American agriculture.
According to the Financial Times, Chinese officials say their leader is offering to lift the 13-year ban on U.S. beef, and they promise to buy more American grain and other ag products.
In the pork market, China is giving long-term support to U.S. producers, according to Chip Nellinger, risk management consultant and futures market specialist at Blue Reef Agri-Marketing. In terms of beef, he says it’s a long shot.
“There’s a lot of mouths to feed in Asia and a growing middle class,” said Nellinger. “I’m sure that’s what our trade representative are working towards. It just might take a while.”
DuWayne Bosse of Bolt Marketing thinks when China decides to open up the U.S. market, it won’t have an immediate impact on prices.
“It would take some time to develop that appetite over there,” he said. “As their middle class grows, they want a higher quality meat, then they will start buying from the U.S.”
While China accepting U.S. beef is a long-term process, in the short-term, Bosse is nervous. He said for the last month, packers have bought cattle contracts for April and now they’re buying cattle “supposedly” until May. He’s concerned that show lists could increase.
“They could have all the cards in this poker game and sit back and bring in the contractor cattle, pull back as the show list gets bigger and dive the cash market down,” said Bosse.
He advises cattle producers to buy put options to have some protection.
Watch Nellinger and Bosse discuss the pork expansion and the numbers from the USDA Prospective Plantings report on U.S. Farm Report above.