U.S. Grain Exports to China Picked up Last Year

U.S. exports of grain, particularly grain bound for China, during 2020 exceeded expectations, which is good news for railroads.

Grain exports began rising during last year’s harvest season and by mid November had risen by 34 percent compared with September 2019.

China has been the third-largest customer for U.S. wheat and during October 2020 it accounted for 73 percent of U.S. soybean exports.

The sale value of those soybean exports of $3.5 billion nearly broke the monthly record of $3.51 billion set in November 2013.

The U.S. Department of Agriculture expects soybean exports this year to be nearly 61 million tons.

It noted that China received more than 1 million tons of U.S. soybeans during the first week of January 2021.

Railroad executives have talked about increasing grain traffic during earnings calls with investors to discuss fourth quarter 2020 financial results.

A Union Pacific executive said volume for grain and grain products was up 20 percent largely due to export grain.

A BNSF spokeswoman told Trains magazine that although grain and grain product traffic was down in early 2020 due to trade policies and smaller crop harvests, grain volume picked up in the latter months of the year.

During the fourth quarter BNSF set a quarterly record for grain and grain products volume.

Analysts say one factor behind the recent rise in U.S. grain exports to China may be trade and diplomatic disputes between China and Australia, and limited supplies of soybeans from South America.

China uses most of its soybean exports as livestock feed, mostly for pigs and of late the hog heard in China has been growing.

Another factor in the rising export of U.S. grain to China has been implementation of a trade pact reached between the U.S. and China during the Trump administration.

That deal, signed in January 2020, called for China to “reduce and eliminate structural, non-tariff barriers to U.S. agriculture in China’s market.”

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