In this file:


·         China Is Sanctioning U.S. Soy Farmers In Hopes To Topple Trump

… the fact that China is paying more for Brazilian soybeans than American soybeans is clearly a political decision, not a business one…


·         Why farmers can kiss their China market goodbye

… China already is investing to build transportation infrastructure to ship soybeans grown in what used to be rain forests…



China Is Sanctioning U.S. Soy Farmers In Hopes To Topple Trump


Kenneth Rapoza, Senior Contributor, Forbes 

Aug 12, 2019


China is not buying U.S. soybeans because of 25% tariffs that make it more expensive. No. China's government has sanctioned its private sector from buying them.


What are the odds of every single private soy crushing facility in China turning away from the U.S. market? The U.S. is the biggest soy exporter in the world. Are we to believe that every soy importer in China has given up because American soy at, say, for the sake of easy math, at $10 a bushel (it's really $8.66 a bushel) is now $12.50 a bushel?


Yes, it's because of the trade war. But the U.S. hasn't stopped importing Chinese widgets. To the contrary. Based on our trade balance, we keep importing more and more stuff from China.


China started "sanctioning" U.S. soy last year. Technically, the drop in sales is not a Beijing official sanction.


Instead of buying from U.S. farmers, they bought around 13 million more tons of soybeans from Brazil, the No. 2 exporter, now the No. 1 exporter.


As a side note, all this talk about Brazil's Amazon being chopped down because of new president Jair Bolsonaro — if you want to know what keeps the Amazon in tact, it's Chinese demand, not Rivers International or Greenpeace.


“It’s really, really getting bad out here,” Bob Kuylen, who’s farmed for 35 years in North Dakota, was quoted saying by CNBC this weekend.


He blames President Trump.


“Trump is ruining our markets. No one is buying our product," he says.


Well, when you base your market largely on one customer...


China is not getting a better deal from Brazil, whose soy harvest runs counter to the U.S. as seasons are reverse.


Brazil prices its soy differently, so here goes an attempt at breaking down the price differential. Soy export prices are currently R$81 per 60 kilograms. That's $20.31 based on Friday's closing exchange rate. Sixty kilograms is equal to 1.6 bushels.


At $8.66 per bushel of soy in Chicago, 1.6 bushels is $13.86. U.S. soybeans based on these numbers are around $6 cheaper than Brazilian soybeans.


China's last inflation numbers surprised to the upside because That doesn't necessarily mean soy, or the chickens and pigs that eat it. But the fact that China is paying more for Brazilian soybeans than American soybeans is clearly a political decision, not a business one.


The U.S. Department of Agriculture (USDA) said Monday that the U.S. will harvest 18.7% less soybeans this year than last year, at around 100 million tons total this season. For some reason, the market was forecasting 102 million despite low commodity prices and China basically banning American soy from its ports.


In terms of stocks, the USDA says American silos will get packed with another 20.5 million tons of soybeans this crop season, which is about 10% below market estimates. American farmers will be harvesting soy over the next three months.


That 20.5 million estimate sits on top of the already 29.1 million tons leftover from last year's crop, at least half of it owed to China, which took its business elsewhere.


The U.S. is harvesting less soy, but the Brazilians are harvesting more, so that means soy prices are not going up unless the dollar tanks.


The USDA thinks Brazil will harvest 5.1% more soybeans this year at 123 million tons.


"It's Like Beer."


In the 1980s comedy Three Amigos, a trio of hapless, out of work silent picture actors on a trip to Mexico ask a bartender for a drink. The barman offers them tequila. They don't know what tequila is, so one asks them if it is like beer. The bar man confirms: it's like beer.


China's actions in the soy market is similar. A trio of hapless farmers asks a Chinese government official what he thinks about Trump. He says they want him to lose so won't buy soy beans from Trump supporting states. They ask him if that's election meddling. The man confirms: it's like election meddling.


Last year at this time, the Chinese did a full-stop on purchases of American soy and pork in hopes to influence the Midterm Congressional elections in November. The strategy, to maximize economic pain and fear in farm counties ultimately helped flip red counties blue. The Democrats won in a landslide, a victory China hopes gets repeated next November.


Assuming China is going to use that strategy again, American farmers will have to find new markets — maybe the meatless movement will do them some good. Beyond meat, there will be more soy farmer desperation due to their old, go-to market going cold.


It is highly unlikely that China dips back into American agriculture, barring a 180 policy shift by Trump.


The U.S. already tried to offer China a deal...





Why farmers can kiss their China market goodbye

And why that might just be the kick in the pants that we need.


by Art Cullen, Commentary, New Food Economy   

August 12th, 2019


American farmers and manufacturers shouldn’t expect relief from a burgeoning trade war with China until President Donald Trump is gone from the White House.


The Chinese on August 5 ordered a halt to all agricultural imports from the United States. Iowa farmers worked for decades to make China their biggest soy customer, only to watch Trump flick it all away with punitive tariffs.


Even Trump himself acknowledges that the trade war might not end until 2020 or later. John Deere, the tractor maker, issued profit cautions recently. Those union members who might have voted for Trump are worried about their hours. Farmers who have lost money six years straight are depending on crop insurance and disaster payments to keep them afloat.


“You will never see the Chinese market the way you had it,” says Jorge Guajardo, Mexican ambassador to China from 2007 to 2013 in the Calderon administration. And probably not the Mexican market, either, Guajardo tells me.


Each nation has been humiliated over the centuries, the former diplomat notes. Trump’s bluster humiliates their leaders, who have their own domestic political problems.


Chinese President Xi Jinping cannot let his public think that he is giving ground to Trump. “You cannot make concessions only to be humiliated again. It’s easier to hunker down,” Guajardo says. “The Chinese have a saying: They know how to eat bitter. They are proud of it. They will never make the mistake of depending on the United States again. They will find a way.”


Like, by turning to Brazil, where China already is investing to build transportation infrastructure to ship soybeans grown in what used to be rain forests.


“The supply lines are being set up. That won’t disappear with a trade truce,” Guajardo says.


The U.S. still has no trade deal with Mexico or Canada. Brazil does. We have picked trade fights with Europe, South Korea, and Japan. As a result, Iowa soybean prices have been hit hard by President Trump. He responded with trade bailouts to farmers totaling $29 billion over the past two years, and last week promised more.


Farmers, Trump tweeted last Wednesday, “know that China will not be able to hurt them in that their President has stood with them and done what no other President would do. And I’ll do it again next year if necessary.”


It probably will be necessary.


Guajardo warns that we have permanently lost at least a share of U.S. agricultural trade to Brazil. For now, we have lost it all. China is closing ranks by clearing disputes with the likes of Canada, to focus resolve on the U.S.


The president’s evaluation of our crumbled export paradigm leads me to a conclusion: American farmers, squeezed year by year until half disappear, have been told for a half-century to apply more chemicals on more acres to feed more people in China. But they would eat bitter before they buy our beans again. What to do?


This is a turning point. We are growing so much corn we burn it in increasing amounts of ethanol. We can’t export our soy and pork to China anymore. That means harder times in Storm Lake, Iowa, my hometown, where processing pork pays 3,000 families, and which is surrounded by ethanol plants spewing C02.


Meanwhile, we have an environmental catastrophe from growing all that corn and soy as Iowa has the filthiest surface water in the country from all that cultivation. Rather than dump money into crop insurance and disaster payments, why not pay farmers to grow grass instead of corn and soybeans? And cereal rye and oats? Cover crops like these save soil, capture carbon from the atmosphere, and prevent pollution of the Gulf of Mexico, which is being choked by farm fertilizer from the Corn Belt.


We need to reduce Iowa’s corn base by about 30 percent to make a difference in global warming and the Gulf of Mexico. But farmers need an incentive not to plant corn for export. The mechanism exists: The Conservation Security Program (CSP) pays farmers for conservation practices on working lands, such as grazing cattle on pasture. Funding was cut in half in the last farm bill. Democratic presidential candidate Elizabeth Warren last week rolled out a plan to battle climate change by significantly ramping up CSP funding and creating an ag innovation fund that would pay farmers for environmental services. Warren’s fellow Democratic candidate Joe Biden likewise calls for agriculture to lead the way in battling climate change and preventing flooding...