US farmer sentiment buoyed by trade deal
Farmers are growing more optimistic about future market conditions after China committed to buy significantly more US agricultural and energy products under the "phase one" trade deal in January.
About 70pc of the farmers surveyed in January by Purdue University for its monthly Ag Economy Barometer anticipate domestic agricultural exports will climb during the next five years on the back of China's commitments — a sharp pivot from sentiment during the summer.
China committed to increase purchases of agriculture products during the next two years by $32bn from 2017 levels as part of the "phase one" trade deal with the US signed nearly three weeks ago. The country is the largest consumer of imported soybeans and has been the US' largest trade partner for the oilseed since 2000, according to the US Department of Agriculture (USDA).
US soybean exports to China fell by 75pc in 2018 after President Donald Trump escalated simmering trade tensions through a volley of tariffs, inciting reciprocal actions from China that eroded farmer profits in the US.
Although soybean exports more than doubled in 2019 from the prior year, they remained more than 10mn t below 2017 levels, according to the USDA. But a growing share of surveyed farmers view the trade deal with China favorably.
Increased exports under the "phase one" deal may be prolonged as overall demand from China has eroded as it works to contain the coronavirus outbreak.
Farmer bankruptcies climbed in 2019
The two-year US-China trade war delivered a significant blow to the US farm industry as more operations filed for bankruptcy and farmers last year were estimated to have accrued the highest level of debt since 1960.
Chapter 12 filings — a form of reorganization specifically for farmers — rose to a new high at 580 cases during the 2019 government fiscal year, which runs from October to September, according to US federal courts data. Farmer debt simultaneously was estimated to rise to $88bn in 2019 — the highest amount in 59 years.
The Trump administration has aimed to keep farmers afloat through a series of trade aid payments totaling about $24bn since 2018 to offset the effects of the trade war with China. Farmers will receive a third tranche of direct cash federal aid payments under the USDA's 2019 Market Facilitation Program (MFP) as early as this week.
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