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Old 08-15-2019, 06:31 PM
Wesley Clark is offline
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How are global agricultural markets realigning as a result of Trumpism and his trade policies


Trump's trade policies supposedly sent China looking for other supplies of agricultural products.

Which products exactly, and which nations are now becoming their suppliers? I've heard soybeans are a big one, and that places like Brazil are stepping in to fill the gap.

I'm guessing the world doesn't trust the US to be intelligent or competent (I can't blame them). Doubly so since many farmers voted for Trump, and since agricultural products are essential for a society to function, I'm guessing a lot of nations are realigning their products.

What is the impact? Will the US change what products it makes, or what nations it sells them to? If Brazil sells soybeans, doesn't that mean they have less farmland for sugar?

I know a lot of farms globally are not very productive, so world crop demands can be met with far less farmland. Do farms just start going barren?

What realignments are happening? Will other customers step up to replace China? Will they demand other crops instead of soybeans?
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Old 08-15-2019, 07:12 PM
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I'd guess there hasn't been much realignment yet. One of the major factors in that is the growing season. Farmers make annual decisions and the changes have been slowly rolling out. We're at nothing like a steady state either. The current situation is not the result of a permanent agreement. We're seeing measures on both sides to force negotiations about other issues. We might yet see a resolution before US and other northern hemisphere farmers finalize their decisions and plant next year's crops with the best information available.
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Old 08-15-2019, 07:22 PM
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Moderating: although itís possible that this has a factual answer I think the answer may be more suited for GD.
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Old 08-15-2019, 07:23 PM
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Quote:
Originally Posted by DinoR View Post
I'd guess there hasn't been much realignment yet. One of the major factors in that is the growing season. Farmers make annual decisions and the changes have been slowly rolling out. We're at nothing like a steady state either. The current situation is not the result of a permanent agreement. We're seeing measures on both sides to force negotiations about other issues. We might yet see a resolution before US and other northern hemisphere farmers finalize their decisions and plant next year's crops with the best information available.
IOW we're fucked. Not good.
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Old 08-16-2019, 03:51 PM
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I'm guessing a farmer in say Brazil might be planting soybeans or other crops specifically for foreign sales.
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Old 08-16-2019, 04:29 PM
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Quote:
Originally Posted by Wesley Clark View Post
Trump's trade policies supposedly sent China looking for other supplies of agricultural products.

Which products exactly, and which nations are now becoming their suppliers? I've heard soybeans are a big one, and that places like Brazil are stepping in to fill the gap.

I'm guessing the world doesn't trust the US to be intelligent or competent (I can't blame them). Doubly so since many farmers voted for Trump, and since agricultural products are essential for a society to function, I'm guessing a lot of nations are realigning their products.

What is the impact? Will the US change what products it makes, or what nations it sells them to? If Brazil sells soybeans, doesn't that mean they have less farmland for sugar?

I know a lot of farms globally are not very productive, so world crop demands can be met with far less farmland. Do farms just start going barren?

What realignments are happening? Will other customers step up to replace China? Will they demand other crops instead of soybeans?
I think some of the assumptions you seem to be using here aren't valid. The world doesn't trust the US, so the fact that China will buy agricultural products from non-US sources means the US will lose out? The world doesn't trust the US but it does trust the CCP because....?

My WAG is that China won't, in fact, be able, in the short term, to make good on it's threats to not use US agricultural products. It will take some time before the markets can realign to allow that. It's not something that will happen on a dime, yet the Chinese kind of still have to eat. I'm not sure there IS an alternative, or alternatives that can bring them non-US agricultural goods at anything like similar costs and volumes in the short term...I mean, if there were, they would be competing with the US on this already. By the same token, the US is logistically geared to sell to the Chinese market, so it would take us some time to re-orient and perhaps sell to others. So, if this is a medium term thing and China really wants to do this permanently, then other countries would have to move towards not just creating the crops but the logistics to sell to China. It would be a fairly substantial investment, as the US sells a lot of product to China. And no one is going to do that if China is just going to switch back to the US in 6 months or a year (assuming they actually follow through regardless). The US would be doing the same thing...we'd be looking for other markets to buy our agriculture. Not like China is the only one. It will take some time to reorient but we can do it. Also, my WAG is that it will cost China substantially more, especially in the short term but maybe in the long term as well. It will definitely cost the US in the short term.

Who can produce the volume the US does to meet Chinese demand? I don't think any country can atm, because they weren't geared to do so. In the medium to long term, I'd guess they would want to go with more local sources if possible, so some of their near neighbors would probably pick up some of the load. I'm thinking that it would be many countries, not one, that would spread the load. As to customers to replace China, I'd say that yeah, that's kind of a no brainer...someone would buy the food. Not sure who right now as it will take time for the market to re-stabilize and find a new equilibrium.
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Last edited by XT; 08-16-2019 at 04:32 PM.
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Old 08-16-2019, 06:03 PM
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If China puts a tariff on US agricultural products in retaliation for the Trump tariffs the cost picture shifts to be in favor of our competitors. And they don't have to completely move away from buying our products. Any major shift made up from increased production in other countries is going to reduce prices which is going to screw American farmers. A lot of sales are done in advance based on the futures market.

What logistics? Freighters full of grain can go from anywhere to anywhere. Agricultural logistics is a lot simpler than manufacturing logistics, and planting new crops (assuming the soil and climate is right) is a lot simpler than building a new factory. Clearly Trump's expectation of a massive increase in US manufacturing as a result of the trade war is not happening and is not going to happen.

Example. Though he delayed the tariffs until December 15, the toy makers are still in turmoil. First, they can't afford to import toys at the last minute which means they have to lay out money earlier and have storage for toys before then (and take the risk they don't sell.) Toy makers borrow in advance of Christmas and this means more borrowing.
Second, while they are thinking of moving to India and Vietnam, the Chinese now know how to make toys to US safety standards, and they have the infrastructure to get parts near by. Neither Vietnam nor India have this yet.
Toys, like crops, get committed well in advance. How are farmers or toy makers going to make good decisions in such uncertainty? (Toy Fair, where a lot of deals get done, is in early February.)
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