January 20

1/20 - The Trump Administration signed “Phase One” of a trade agreement with China last week. This should have lit a fire under protein and grain prices - but it didn’t. What Phase One said was that China commits to purchase an additional $12.5B of agricultural products from the U.S. in 2020 above a baseline year of 2017. There were no specific targets for individual commodities – so it could potentially be 80% soybeans. What was not in the agreement was any change to the punitive import tariffs on U.S. pork. That leaves the U.S. at a competitive disadvantage to the European Union, which accounted for 55% of Chinese pork imports in 2019. CME lean hog futures, which averaged $70.14/cwt for the year in 2019 and started 2020 at $71.55, closed at $67.68 on Friday. Forward futures contracts for 2020 are averaging $71.82/cwt, down from $78.15 just a week ago.