In this file:


·         Column: CBOT soybeans mark one-year anniversary of China’s tariff threat

… CBOT soybeans are currently struggling to find a direction…


·         Don’t Count on U.S.-China Trade Relations Warming Up Anytime Soon

Despite positive messages from both sides, hopes are fading that they can find mutually beneficial policies.




Column: CBOT soybeans mark one-year anniversary of China’s tariff threat


Karen Braun, Reuters 

April 5, 2019


The opinions expressed here are those of the author, a market analyst for Reuters.


FORT COLLINS, Colo. (Reuters) - One year ago, the U.S. soybean market realized its worst fear: China announced plans to put tariffs on the U.S. oilseed along with a handful of other imports in response to the U.S.-imposed duties on Chinese goods.


While market participants knew that the April 4, 2018 announcement was possible, it hardly seemed feasible given China’s historic reliance on U.S. soybeans. Why would China make it more difficult to obtain a necessary product, one for which there are very few alternatives?


All is apparently fair in a trade war though, and China imposed the 25-percent duty on U.S. soybeans on July 6. The market response was harsh as most-active CBOT soybean futures fell more than $2 per bushel (20 percent) from late May to mid-July, with the bulk of the plunge occurring in early June.


But now, one year after China’s shocking move, trade talks between the two sides drag on, even though an end has appeared to be in sight several times already. As a result, it could be argued that CBOT soybeans are currently struggling to find a direction.


Top trade negotiators from both sides met in Washington to continue the talks on Thursday, finishing with a meeting between President Donald Trump and China’s Vice Premier Liu He. Trump said that it should be known in four weeks whether a deal is likely, familiar words to market watchers.


Trump had said back on March 14 that it would probably be known in the next three or four weeks whether a trade deal can be reached. Starting in December, the market had been expecting a deal by March 1, which came and went with no fanfare.


The trade negotiations, anticipation of upcoming meetings and announcements, tweets from Trump, and other related items have largely governed moves in CBOT soybean futures for a year now. Ever since most-active soybean futures reached a 10-year low of $8.12-1/4 per bushel last September, the trade uncertainties have probably been more supportive than damaging.


On Thursday, soybeans were nearly $1 off that low, closing at $9.06-1/2 per bushel. That price is nearly identical with the same date in 2016, but otherwise it is the lowest April price for the most-active contract since 2007.


As a reminder, the U.S. Department of Agriculture predicts 2018-19 U.S. soybean ending stocks at 900 million bushels with a stocks-to-use ratio of 22 percent. USDA’s March 2016 estimate for 2015-16 ending stocks was 460 million bushels with a ratio of 12 percent, though both final numbers were less than half those amounts.


Soybean futures have generally trended...


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Don’t Count on U.S.-China Trade Relations Warming Up Anytime Soon

Despite positive messages from both sides, hopes are fading that they can find mutually beneficial policies.


By Jenny Leonard, Bloomberg Businessweek

Apr 4, 2019


President Trump, who made taking on China’s unfair trade practices one of his top priorities after coming into office in 2017, has shown that he’s willing to use unconventional tools to get Beijing to the table. But even if negotiators from his administration get China to commit to their demands—including protecting U.S. intellectual property and buying massive amounts of U.S. goods and services to narrow the trade deficit—that doesn’t mean America will go back to business as usual with Beijing.


This isn’t solely a function of the administration’s brinkmanship, which has led both countries to the point of imposing new duties of roughly $360 billion over the past nine months. Shortly after U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer visited China for a round of negotiations in late March, China’s vice premier, Liu He, returned to Washington for what may be the final push for the two countries to reach a deal. After meeting with Liu on April 4, Trump said that they were “rounding the turn,” while Liu said that a “new consensus” had emerged, according to Xinhua News Agency. But business leaders, both parties in Congress, and U.S. allies are also running out of patience with China’s trade practices, leaving Beijing with few allies in Washington to help defuse an economic standoff.


In the past two years, the Trump administration has imposed tariffs on roughly $250 billion in Chinese imports. It’s also vowed to limit market access for Chinese telecommunications companies and to scrutinize Chinese investment in critical U.S. sectors. Embarking on an international campaign, the administration is pushing allies to bar China’s Huawei Technologies Co. from providing the infrastructure for 5G networks. Many Chinese officials find it hard to grasp that the rules of engagement are no longer the same, says Tim Stratford, chairman of the American Chamber of Commerce in Beijing. “Many in China see so many things in the U.S.-China relationship change at the same time, they’re having a hard time assessing what are U.S. policy goals and priorities,” he says.


When the U.S. Congress in 2000 agreed to grant China permanent normal trade relations—a year before the country became a member of the World Trade Organization—no one expected China to adopt America’s values. But there was a sense that Beijing was committed to a more market-oriented economy. While China is still too big a market to ignore, the shine has worn off, says Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce. Just 33 percent of respondents in the U.S.-China Business Council’s 2018 member survey said they were optimistic about their companies’ prospects in China, compared with 58 percent in 2009.


Initial signs that China was implementing its WTO commitments during President George W. Bush’s first term—including lowering tariffs on thousands of products and revising national and local regulations to bring them into compliance with WTO rules—were followed by a setback when the global financial crisis hit in 2008. For many reformers in China, the crisis was proof that the U.S. economic model had failed. “I think under Xi Jinping the possibility of potential alignment has essentially disappeared,” says Scott Kennedy, a China expert at the Center for Strategic and International Studies. In response to the crisis, he says, the Chinese Communist Party doubled down on indigenous innovation, shutting out foreign companies and strengthening the People’s Liberation Army.


Senator Mark Warner, a Virginia Democrat on the Finance Committee, says that while he doesn’t agree with all aspects of the Trump team’s approach to trade—particularly imposing tariffs on imported metals, which has alienated allies—he gives the administration credit for making clear that relations with China cannot continue as they had. Under the Obama administration, Warner says, a sense of “American and Western arrogance” prevailed, while developing a strategy to counter China’s economic aggression should have been a higher priority...


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