Chinese Vice President Xi Jinping visited the United States this week, stopping in Iowa, one of the United States' top corn, soybean and hog producing states. Mr. Xi (pronounced SHEE) is expected to become the next leader of China, making his visit even more meaningful as it sets the stage for years to come. During his visit to Iowa, Mr. Xi reinforced China's trade relationship with the U.S. Midwest, announcing major purchases of U.S. agricultural exports.
Since the grain harvest last fall, China has bought around 70 percent of American soybean exports and over 10 percent of U.S. corn shipments. China mostly grows and consumes its own corn, but has to meet nearly 80 percent of its soybean demand by buying from foreign countries like Argentina, Brazil and the United States. China recently became the third-largest buyer of U.S. pork, importing nearly $1 billion in 2011.
Over the last 15 years, China has increased its soybean purchases by 2000 percent, and went from being a major exporter of corn to a minor importer. Likewise, rising meat demand and high prices in China have caused the Chinese to boost pork imports ten-fold since the mid-'90s.
As China transitioned into becoming a major commodity consumer, the value of U.S. agricultural products exploded. Since 2000, corn prices have more than tripled, rising from $2.04 per bushel to $6.44 on Friday, soybeans shot up 175 percent from $4.61 per bushel to $12.73, and lean hog prices charged 63 percent higher, rising from 55 cents per pound up to 90 cents per pound.
As a result of increasing prices and trade volume, agriculture now accounts for one-quarter of all trade with China, the United State's largest trading partner.
Petroleum Pushes Higher
Crude oil prices continued surging this week, spurned by continued fears that Iranian threats could interrupt the supply of oil to global markets. Rumors of Iran halting oil exports to Europe, a demonstration of Iranian nuclear advancements, and a series of attacks on Israeli embassies all sent shock through the oil markets. As of Friday midday, crude oil was trading near $103 per barrel, up $4.50 on the week.