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Veteran Advisor

It Begins...Force Majeure China

"China Chamber of Commerce for Import and Export of Machinery and Electronic Products said it will handle requests of applicants over a force majeure certificate, as many Chinese companies could not make on-time deliveries or honor their contracts in the wake of the nCoV2019" - Global Times-China

...what's that old sayin'? Oh, yeah.

"Smoke 'em if you got 'em."

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9 Replies
Honored Advisor

Re: It Begins...Force Majeure China

Hey Freedom, I wonder if the FM won`t be mostly on durable goods imports from the US?   The news just reported that the tariffs on US soybeans will be dropping on Friday. With all that`s going on over there, the last thing president Xi needs is for the population to go hungry.

Veteran Advisor

Re: Go hungry? Brazil has record harvest and lots of beans to sell.

Now that the Chinese have the "force majeure" card to play, the Brazilians will just drop their price, undersell us,  & ship beans until they've sold as much as they can or need to.

 Don't expect to see any significant US bean sales to China until Oct., if then, now.

  Projections suggest the Chinese GDP might go to 3.5%.  Their factories are closed and they're not shipping any product.  If that's the case, what do you expect the Chinese to buy beans with? 

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Veteran Advisor

Re: It Begins...Force Majeure China

Yeah, with 100 million+ people in total lockdown, where only 1 person from each home is only allowed to leave the house every other day for supplies, it won't take much to send them over the edge. 

But what got me was the percentage of tariff-lowering the Chinese did on soybeans.  They lowered tariffs on things by up to 50% EXCEPT soybeans.  They lowered soybeans from 30% to 27.5% -> as the kids say "big whoop."

Just proves soybean tariffs were always meant to bring U.S. farm votes over to the Chinese side.

==

Did you see where they may have accidentally released the real pandemic numbers.  Chinese Tencent (a name you now see on a lot of Hollywood movie credits) is said to be releasing real pandemic numbers for a few minutes, then changes them over to official numbers.  This has happened on numerous occasions.  The number of deaths before they got changed?  Over 25,000.

I have been operating under the assumption that noticeable/not hideable real inflation would rear its ugly head this year due to shortages in production but sure as heck never took into consideration that it would be shortages because nobody can go to work and all the pigs were dying and now bird flu is back.  What the heck!!

And a big whoa! on Greece getting its first case of swine fever.

Make sure you plant a bit of ground to cover things that can't be imported in a pandemic lockdown that you and yours like to eat.

Buckle up, BA, this ride is just getting interesting.

Veteran Advisor

Re: It Begins...Force Majeure China

I had an unpleasant thought.

We have something on the order of 10M feral hogs in this country.

What happens if ASF gets into that population? I guess we'd get serious about eradicating them, anyway.

I was explaining to a non-farm person that whatever they might think about the current structure of the US hog biz it is a lot more biosecure than in "the good old days."

Not that an outbreak wouldn't still be a huge deal.

 

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Veteran Advisor

Re: It Begins...Force Majeure China

If the collapse in hog futures continues I might buy a few far out cheap calls as a lotto ticket.

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Honored Advisor

Re: It Begins...Force Majeure China

Really need country of origin on products now more than ever.

 

virus running rampant, many companies outsourced or plain moved production over there.

Shampoos and every other personal hygiene product made over there or components sourced from there.

I wouldn't want to bet spores or the virus itself couldn't survive to spread over here in or on those products. This thing isn't figured out yet ...

They shut us off for way less then this in the past.  Think gmo crops...

Honored Advisor

Re: It Begins...Force Majeure China

It is really a good deal........ assuming plague equivalent isn't the case....

China is a very unreliable place to do business especially for Ag.   just think..... If we don't sell them a lot of beans...  so we have inventory and pull back the reins on production ( usda first..... those boys build the surplus with their "expertise") and we follow.   I think we need to create some separation  economically from China. They are  risky, the check often bounces for a fictional reason... traits found when convenient for example.  

Whats better..... selling less and putting our folks back to work(and off the california streets--where all our kids are headed if we kill jobs like we planned).... resting a few acres, rebuilding a few things ----------------------------or buying endlessly on amazon to finance China's purchases.  Seems like our finances might be better off if we stopped borrowing to make China and silicon valley rich.  As long as our borrowed congressional cash keeps funneling directly back to china to do our work for us we aren't getting anywhere selling them a small 50 billion of commodities.

Just looks dumb to me.  So lets all stand in line and hope for the federal methadone, since our fix didn't come.

Veteran Advisor

Re: It Begins...Force Majeure China

Went to a local shop the other day for some row cleaner bearings  Imported ones where about $16, NTN (brand?, but they are US made) about double that.  I asked if they would last twice as long?  Well... Maybe.  I went with the american made ones.  Did not want China stuff.  If they won't buy my products, why should I buy theirs?  Besides, MFP will way more than cover the difference.

Honored Advisor

Re: It Begins...Force Majeure China

I can see both sides to what would be more biosecure the CAFOs of today or the good old days.  In the good old days 300 hog farmers in the county, farrow to finish, they were born on the farm and moved 300 feet away to get fed out.  Most of the feed ingredients were raised one that same farm, the hogs had access to direct sunlight that kills viruses.  When sold they went to town in a farm use, 16` bumperhitch trailer.   Feed that was bought, some farms used Moormans or McNess, Kent, Golden Sun, Vigortone, Hubbard or dozens others, if one feed brand spread a disease it would isolated quickly not affecting everyone.

Today feed trucks deliver to many different sites every day, livestock haulers on on farms, plants, sale barns and buying stations in a 300 mile radius.  The thing is there`s Holden, Christiansen, Iowa Select ect if there`s a outbreak it`s a million pigs at risk in one slug, not a couple hundred head on one farm in one township in one county. 

Cafo production has the shower in shower out and netting on the barn walls to prevent birds, but it`s all dependent on the human factor.  If rodent control gets lax and a herd gets infected with the trucks coming and going and electricians going from one barn to another, it could be a big problem. 

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