Well, who thought that the Chinese wouldn’t honour their side of the Phase 1 trade deal with the USA, hands up, OK, everyone can put their hands down now. Not only was it predictable but the last minute inclusion of an out clause in the case a pandemic breaking out (shocking of them to think of such a thing, let alone plan for it) kind of gave their intentions away a little didn’t it. I mean we had a pretty good idea it wasn’t worth the paper it was written on when their first response was that they will only buy US product if and when it suited them and if it was price competitive. The US product hasn’t been able to compete into China against S.American product, Australian product, Black Sea product for ages.
So Trump has spat the dummy, again, and is threatening retaliatory tariffs against China because they haven’t bought enough US product. This is now becoming a rolling train crash for US grain markets. Yes he’ll probably buy a few voters off with another round of market support measures but to suggest the last few years has been healthy for US agriculture would be silly. I guess it has revealed just how little China does rely on US ag products and how much the US relies on China. To negotiate the way the US have tried to is akin to someone like Graincorp trying to tell farmers they can’t use their own silos though. Who knows, maybe there is some awesome underlying strategy, maybe this is simply beat up, either way the US needs to look at reducing its reliance on Chinese imports / exports and reduce ending stocks of grain, i.e. lower production, if they want to keep their domestic values high.
Wheat and soybean futures were lower on the back of the threat of tariff increases between the US and China. Corn was flat.