Posted November 22, 2016

 

By Seshadri Ramkumar

 

LUBBOCK, Texas – China will be a key player in the cotton market in the current situation after the recent U.S. presidential election, according to Dr. Marci Rossell, former CNBC chief economist. 

 

It is no surprise that China’s economy has been slowing in the recent past. In addition to this factor, all eyes will be on the United States and China trade relations. The United States’ new administration’s policy on China trade will significantly impact the U.S. agricultural export trade, Rossell said.

 

Rossell visited Lubbock this month to keynote at an economic luncheon hosted by the Lubbock Economic Development Alliance. In speaking to a packed room at The Overton Hotel, Russell presented four economic-related scenarios with varying degrees of probabilities as a result of the recent election.

 

There is a 25 percent chance that U.S may likely impose a 35 percent tariff on Chinese goods, resulting in varying consequences to the U.S. economy and in particular to the agricultural export sector, as 25 percent of U.S. soybean gets shipped to China, she said.

 

As China is a valued customer of U.S. cotton, in a question from this scribe on the impact for the U.S. cotton industry, Russell pointed out that it depends on how the new trade relationship will proceed. If tariff scenario happens, then cotton may be in a rough spot. However, Rossell 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.

 

Rossell also pointed out that 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., in reacting to Russell’s economic picture said, “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.”

 

Rossell suggested the best way forward is to reach out to elected representatives and reason with them on the importance of sound policies towards trade with Mexico and China.

 

A useful takeaway message from Rossell’s talk is that economic literacy is needed to move the industry and economy forward.

Former CNBC chief economist speaks

After U.S. elections, China to be key player in cotton market