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Monday, April 09, 2018

Oh, hurt us some more, China.

Last week, every political pundit and newspaper writer became an expert on soybeans. China had threatened to slap a retaliatory tariff on soybeans.

"Indiana soybean farmers wary of potential U.S. trade war with China: 'We're in a vulnerable time'," the Chicago Tribune reported.

"Iowa farmers say they have a lot to lose in a trade war with China," CNN reported.

"Impact Of China's New Tariffs Could Be 'Huge' On U.S. Soybean Farmers," NPR reported.

It was Soybeanageddon.

But just as suddenly, Europe developed a hunger for soybeans.

"Escalating tensions between the United States and China have triggered a flurry of U.S. soybean purchases by European buyers, in one of the first signs that trade tariff threats lobbed between the world’s top two economies are disrupting global commodity trade flows," Reuters reported.

"News of the sales, confirmed by the U.S. Department of Agriculture on Friday, helped to underpin benchmark Chicago Board of Trade soybean prices after U.S. President Donald Trump threatened to slap tariffs on an additional $100 billion of Chinese goods."

Hmm. So the soybean market was saved by Europe.

"The United States is the second-largest soybean exporter in the world after Brazil. China is by far the top buyer, importing about two-thirds of all soybeans traded globally," Reuters reported.

Say, you don't think that the soybeans headed for Europe will wind up in China, which cannot feed itself without help from Brazil and the United States.

Reuters offered a different take, noting, "accelerated buying of Brazilian beans by Chinese importers, wary of potentially paying steep tariffs on U.S. purchases, has sent Brazilian export premiums to historic highs."

So instead of buying from Brazil, Europe will buy from the United States -- at a higher price than China paid.

Oh, hurt us some more, China.

13 comments:

  1. Another Reuters classic. "Weary of potentially paying." How can you be weary of something you aren't doing yet? Ultramaroons.

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    Replies
    1. Reuters is a Communist propaganda machine of the old Soviet type. Far worse than AP.

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    2. That was their mistake but I should have caught it. Fixed. Thanks.

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    3. Weary, wary. Reuters, rooters. It's all the same. LOL. Good catch, zregime.

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    4. "Weary," "wary," they both start with "w." Journalism school can't cover everything, and social justice must take top priority.

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    5. Perfectly feasible, man.

      Look, I’m about to read a Reuters articl ... ZZZZZZ.

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  2. the weather down in South America has not been good for their soybean crops, either. So that clearly plays into it. -- BJ54

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  3. Soybeans products used for human food are a smaller percentage than are used for fodder. Also, soybean products have many industrial applications as fuel, lubricants and plasticizers. Feeding Chinese people is a small part of their soybean imports.

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    1. Soybean products are often used as insulation for car wiring. Then when people return from their overseas holiday, they find their car won't start; it was parked at the airport, where small animals ate the insulation off the wiring. Expensive to repair!

      Then there's the "soyboy" phenomena- y'know, maybe soybeans ought to be banned, as a danger to the human race!

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  4. Reuters calls them "threats." I call them "offers and counteroffers."

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  5. FWIW, and we must remember the market is highly speculative, more than half of Friday's loss has already been made up.already

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  6. Edamame, anyone?

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  7. The tariff on soybeans is stupid since there physically aren't enough soybeans in the world outside of the US to make up for US exports to China.

    So either soybean consumers in China have to pay 25% higher price or find a replacement.

    Either way the domestic Chinese soybean price is going up, and will hurt about a billion peasants through food price inflation.

    The other thing is if Chinese manufacturers do what they usually do and replace the soybeans with all sorts of strange rubbish there may be another massive crisis of trust.

    (Here in Australia we get Chinese ladies lining up before 7am to buy baby milk powder so they can mail it home.)

    If the CCP digs in on this crazy tariff they could get themselves into a world of hurt: unrest, demonstrations and even potentially food riots.

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