CHICAGO — The US Agriculture Department’s closely watched monthly supply and demand forecast will factor in the broad goals of the Phase 1 trade deal, but details of China’s purchase commitments will not be part, the agency’s top economist said on Thursday.
USDA’s commodity forecasts do consider trade actions or agreements that are in place as of the time the reports are published, the agency said in a white paper released Thursday.
So while the broad goals of the deal will be considered, the specific details are not available, USDA Chief Economist Robert Johansson told Reuters in an interview.
“We don’t have the details of the Phase 1 agreement in particular,” he said. “We have the overarching sort of goals and that is going to be considered by analysts as they come up with all the WASDE estimates.”
The agreement calls for China to boost its purchases of US agricultural commodities by $40 billion over the next two years.
While the Phase 1 deal may contain specific purchase commitments for individual commodities, “the Office of the US Trade Representative (USTR) has not released that information publicly, and it therefore plays no direct role in USDA’s market analysis and forecasts,” according to USDA’s white paper.
Other unknowns include “whether retaliatory tariffs will apply to those purchases or the timing of those purchases in a given calendar year,” according to the paper. “Moreover, commodity-specific commitments are not publicly available and are therefore not considered in the published forecasts.”
“There are a lot of different ways to get the Phase 1 agreement” dollar figure, Johansson said. “We do not really know what path that is going to be at this point in the year.”
Commodity traders and grain merchants have been waiting for signs of a pick-up in Chinese demand, particularly for soybean exports from the world’s number one buyer of the oilseed. But export sales from the United States have remained sluggish since the deal was signed.
Chinese demand for US exports typically slows this time of year as the South American harvest begins.
USDA will incorporate recent export activity, crop sizes in the U.S. and overseas, and other market information into its outlook, Johansson said. The government also will have to track the impact of coronavirus and African swine fever in the monthly report. — Reuters