China to Remain Key Player in Cotton Market and Trade Scenarios
November 16, 2016 China will continue to be a key player in the cotton market following the recent U.S. Presidential election, says Marci Rossell, former CNBC chief economist.
Yet, with China’s economy continuing to slow, all eyes will be on the United States and China trade relations. The new U.S. administration’s policy on China trade will significantly impact the U.S. agricultural export trade.
Rossell’s remarks came during a keynote presentation to a recent economic luncheon hosted by the Lubbock Economic Development Alliance. Speaking to a packed room at The Overton Hotel, Rossell presented four economic-related scenarios with varying degrees of probabilities as a result of the recent election.
One of Rossell’s scenarios shows a 25% chance that the U.S. may impose a 35% tariff on Chinese goods, resulting in varying consequences to the U.S. economy – and, in particular, to the agricultural export sector, as 25% of U.S. soybeans are shipped to China.
Rossell noted that China’s continuing role as a valued customer of U.S. cotton may well depend on how any new trade relationship will proceed. If the tariff scenario happens, then cotton may be in a rough spot. However, she also pointed out that probabilities and estimates don’t mean anything these days after what has happened in the recent political elections in the United States. Plus, the slow growth situation in China has already been factored into the current cotton market conditions.
Steve Verett, executive vice president of Lubbock-based Plains Cotton Growers, Inc., reacted to Rossell’s economic picture, stating, “U.S. agriculture has long relied upon robust export marketing conditions, particularly in the cotton industry where a significant amount of our raw product is exported. Our markets continually evolve so we can remain viable and meet consumers’ demands.
“As consumer preferences and trends change from year to year, the agriculture and export market sector will continue to adapt in order to maintain a strong and viable market for our growers,” he added.
Rossell urged the best way forward is to reach out to elected representatives and reason with them the importance of sound policies towards trade with Mexico and China.
Throughout Rossell’s talk, she noted that economic literacy is needed to move the industry and economy forward. One of the best ways forward at this time is to reach out to elected representatives to discuss and stress the importance of sound policies toward trade with Mexico and China.
A resident of Michigan, Rossell praised her audience, stating that Texans believe that trade is good for everyone, which is important when it comes to future trade relationships with valuable partners.
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