What China Thinks About Russia Will Have Impact on Trade

International issues always have a big impact, either good or bad, on the U.S. farm economy.

Washington State University’s Ag Economist Dr. Randy Fortenbery says with the Black Sea region exporting so much wheat and corn, the war will have an immediate impact on growers this year, and potentially for years to come. “On the grains side the big gorilla is the Russia/Ukrainian conflict. But for the other crops, what really matters is how competitive we stay in the external markets, and right now, I think the big question is what happens to the value of the U.S. dollar?”

He was quick to add that China remains a big wildcard as well.

Last year, China purchased a lot of soft white wheat from the U.S., and they purchased about 13 percent of all exported American wheat. But, Fortenbery says, it looks like this year, China will drop back to pre-trade war levels, purchasing roughly five percent of exported wheat.

And while that means China could be a growth market, the big question that remains is where does China come down on the war between Russia and Ukraine? “Do they tend to side with Russia and say Russia has a right to recognize these states that are claiming independence because it might be more consistent with the way China thinks bout Taiwan and Hong Kong? Or do they tend to be more western thinking in the sense they don’t believe that anybody has much to gain from a larger scale conflict there?  So, how they play and whether they more align with NATO, let’s say, in terms of their response to Russia or whether they more align with Russia could have a lot to do with their trading relationship with us.”

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