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Pecan Prices and Trade Tensions Between China and the US

The US and China have had a tumultuous relationship over the last couple of years as US President Donald Trump attempts to level the playing field when it comes to trade imbalances and intellectual theft between the two countries. 

 

As most farmers are already well aware, the Chinese Government has retaliated to US tariffs with a series of their own tariffs directed at various US industries including agriculture. As the trade dispute escalated, tariffs increased and demand for certain US ag products into China decreased. Soybeans prices took dip in the first months of the trade war and have been slow to recover, still holding around a dollar per bushel lower than pre-trade war levels. 

After a nearly 2 year long negotiation the two countries announced a phase one trade deal had been reached in January of 2020 ,and in February the phase one trade deal went into effect. China has committed to buying 40+ billion dollars worth US ag products over the next years with subsequent increases promised in the future. 

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Since the announcement in January the trade deal has been on shaky ground and has not been able to instill markets with any confidence as of yet. However China has been purchasing US ag products, while purchases are still hovering around 7.5 billion for the year, many believe that China will make larger purchases toward the later part of the year. 

 

Pecan farmers have felt the pains from the trade dispute as prices of pecans on the farm fell amid the trade dispute as China was, at the time, the largest export market and growing each year. In fact Chinese demand for in-shell pecans has reshaped how pecan growers produce pecans encouraging planting of varieties that fit the Chinese export market, typically oversized nuts with high yields. But the price drop was not only on the farm as shelled wholesale prices dropped on the heals of the trade war as well. 

The latest announcement of tensions with the Chinese government being asked to vacate the embassy in Houston Texas could have an impact on the trade relations, the cited “intellectual theft” is one of the reasons listed for the onset of the initial trade dispute back in 2018. 

 

American pecan growers have managed to mitigate the damage from the trade dispute with China. Even as the single largest export market all but shut down access to trade, American pecans have managed to thrive, increasing demand right here at home. With the marketing order fueling awareness and demand for American pecans growers have been able to find homes for their pecans.