China’s U.S. Ag Purchases Cool, Global Activity Remains Solid

When crop ending stocks are increasing and commodity prices are falling, additional exports are often a source of improvement. Because export magnitudes and trade partners vary by commodity, it’s worth stepping back and considering big-picture conditions.

During the first eight months of 2024, China purchased $15 billion worth of U.S. ag products, the slowest pace since 2020. Commodity-level declines are obvious with soybeans, corn, poultry, and pork. That said, China has purchased additional quantities of tree nuts, wheat, cotton, and sorghum.

When trade activity is measured on a dollar basis, changes can be driven by quantities exported and the underlying commodity prices. With China’s purchases, lower prices accounted for $1.6 billion of declines, while lower quantities purchased contributed another $0.75 billion decline. It’s noteworthy, and perhaps even frustrating, that lower commodity prices haven’t resulted in additional quantities purchased by China.

At the global level, the situation is more optimistic. First, total 2024 activity through August was only slightly behind the same period in 2023 (less than 1% lower). Second, lower commodity prices have been largely offset by higher quantities.

Finally, while trade with China captures significant headlines, notable improvements exist. For instance, China’s $2.4 billion slump in U.S. purchases is offset by higher purchases in other countries, including Mexico (+$1.4 billion).

Wrapping it up

There have been a few big disappointments on the trade front, namely soybean, corn, and meat sales to China. However, numerous smaller wins have accumulated meaningfully. While China’s year-over-year activity is eye-catching, the handful of other countries offsetting those that decline, including Mexico, are easily overlooked.

The implications are that any improvement in ending stocks due to stronger export activity will likely come from numerous, smaller-quantity sales. In other words, we’re less likely to see any trade improvements summarized by splashy headlines about China’s strong agricultural demand.