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Senior Advisor

Well, one thing's for sure.....

Phase One is supposed to be signed in early January.

Well, one thing's for sure, if the Chinese are really going to buy $50 billion extra in agricultural goods next year they will have to get cracking right away so we'll know if there's anything to the deal soon enough.  They'll have to pretty much not buy anything from Brazil this spring and start buying early next fall to make their quota.

If that's the case, given how short the bean is, we can reasonably expect the price of beans to just about double in a month or two.

  If there's anything to this deal, that is.

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16 Replies
Senior Advisor

Re: Well, one thing's for sure.....

Depends on how much of their hog herds have been wiped out by the swine fever. Pork might be the big purchase. And then it doesn't take much corn or bean meal to feed dead hogs.

Senior Contributor

Re: Well, one thing's for sure.....

Do you think the export terminals can handle an increase like that I see strikes coming

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Senior Contributor

Re: Well, one thing's for sure.....

In the past weekly sales over the years if we push about 120 million bushels through the augers between the big 3 crops we are doing pretty good to get much more than that seems like a stretch but could be wrong to 

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Senior Advisor

Re: I'm a little surprised that Lighthizer is the one trying to sell this $50 billion in....

I'm a little surprised that Lighthizer is the one trying to sell this $50 billion in agricultural purchases.  Take for instance, soybeans, we might expect to normally sell the Chinese 30 million metric tons (1100 million bu) or roughly $11 billion worth.   If we doubled that to 2200 million bushel, there would be real domestic shortages and the price would about double. 

  Yet the price hasn't budged.  I guess nobody believes it.

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BA Deere
Honored Advisor

Re: I'm a little surprised that Lighthizer is the one trying to sell this $50 billion in....

They know at some time the Sun will rise, but unless you know that it`s at 7:53am, the margin calls will eat you up.  The shorts have to be quietly sidling towards the exit door or it`s too early.  Then China has to know that the moment after the deal is made, it`ll be limit up days ahead, so one would think if there`s a deal it`ll be gradual.  That`s why before the ink pens come out, there might be small "good gesture purchases".    IMO


Re: Well, one thing's for sure.....

There seems to be a lot of confusion, because some people are quoting how much the Chinese are promising to buy, and some are quoting how much MORE China is agreeing to buy, and some using the 2017 and some the 2016 baselines (I think!)

As best I can tell, the Chinese are promising to buy $50 billion over 2 years, which would be a $32 billion increase over the two years compared to 2017, so roughly $16 billion more per year, but no promise or guarantee that the two years will be equal. But of course, the Chinese themselves haven't quoted any numbers yet.  

I will be happy as long as we are all arguing about how much the increase will be! Maybe there'll even be some corn and beef in the mix.

Veteran Advisor

Re: Well, one thing's for sure.....if you want to know, go to the source

"Trade war sets trend for China’s export diversification

Source:Global Times Published: 2019/12/16 23:27:27

A view of a container port in Taicang, east China's Jiangsu Province, Oct. 30, 2019. (Xinhua/Li Bo)

China will probably buy more US goods next year, but that won't reverse the impact of the trade war, which has seen China pursue export diversification as breakthrough.

The diversification trend of China's exports has been notably obvious so far this year. While bilateral trade between China and the US witnessed a remarkable decline, China's trade with the EU and the Association of Southeast Asian Nations (ASEAN) jumped considerably. According to the latest statistics from the General Administration of Customs, in the first 11 months of this year, China's trade with the US fell 11.1 percent year-on-year, with its exports to the US down by 8.4 percent. Meanwhile, China's trade with the EU rose 7.7 percent, with its exports to the EU up 9.5 percent, while its trade with the ASEAN increased 12.7 percent, with its exports up 16.9 percent.

Although the US and China have reached a cease-fire trade deal, the latter still needs to become more flexible in responding to America's China policy by improving its trade structure, which was too dependent on the US for a long time.

China's heavy reliance on the US market for its exports in some areas is nothing new, and for years, the country had been trying to change the situation, but only to see little results. However, due to the pressure of the trade war, Chinese companies have been forced to make adjustment toward diversifying over the past year. And such efforts won't stop once start. For Chinese exporters, how to explore new markets and develop new products based on the market needs will be the main challenges facing them in the year to come.

Of course, there is no denying that it will be a daunting task for the entire Chinese economy to expand and diversify exports. This is also why the Chinese government has begun to formulate policy guidelines to promote trade in line with the diversification trend. Meanwhile, in order to deepen reform and opening-up, China has also pledged to further expand and diversify imports, which, to a certain extent, may also facilitate exports. In fact, imports and exports are complementary to each other in many cases. The imports of high-tech and high-quality products will be conducive to the transformation and upgrade of the domestic economic structure, offering guidance and reference for domestic companies to explore diversified markets.

Overall, the improved foreign trade structure as well as the diversification pursuit will be an important part of China's economic transformation in the years to come. And such adjustment will not just reduce China's reliance on US imports and exports. More importantly, it will bring major impact to the pattern of global trade in the long run."
In a trade war, it doesn't matter 2 sheets on what our media says, it is what THEIR media says that is important:
1.  China plans to continue to move away from what they consider too much dependency on the United States re: both the import and export markets.
2.  China ONLY plans to purchase from the United States as much as their markets demand -- and not an ounce or dollar more.
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Veteran Advisor

Re: Well, one thing's for sure.....if you want to know, go to the source

"China, US reach trade deal in principle for temporary ceasefire

By Li Xuanmin and Xie Jun Source:Global Times Published: 2019/12/13 23:20:55

China and the US have agreed on the text of a highly anticipated phase one trade agreement, under which Washington has committed to roll back tariffs in phases and Beijing will increase its purchase of US products based on market demand, Chinese officials announced on Friday night, marking a milestone first step in resolving the 20 month-long trade war that has dragged economic growth around the world.

The market cheered the news as a precious respite for China and the US whose economic relations were soured by the protracted dispute.

The US has made a commitment to cancel tariffs on Chinese imports "in phases," lowering tariffs instead of increasing them, China's commerce ministry said. 

In response to the US tariff rollback, China will consider not imposing tariffs on more than 3,300 types of US goods, including auto parts and chemicals due on December 15, Chinese officials disclosed.

China will also expand agricultural imports from the US, including soybeans, poultry and pork to fill up vacancies in China's domestic market.

The text of the phase one deal includes nine chapters ranging from intellectual property rights, technology transfers to the exchange rate and agriculture. More detailed terms and data will be released later. 

Chinese economists hailed the deal as "exciting" as it marked a long-awaited easing of the two countries' economic relations. 

"This is a choice of reason and a solution to practical problems. If we don't solve the problems, they will hurt both countries," said Bai Ming, an economic expert close to the Ministry of Commerce

"The US has shown a positive attitude by cutting some of the tariffs. They are not showing enough of it, but it's an improvement," he said. 

The trade volume involved in the China-US trade war is unprecedentedly large, and it is understandable that the US needs to remove tariffs in stages, which could include a possible rollback of new levies scheduled to take effect on Sunday, said Mei Xinyu, an expert close to China's commerce ministry.
Mei told the Global Times on Friday that the agreement on the text of the phase one deal does not mean that all trade issues can be resolved, and any “accidents” could happen during the implementation. “The Chinese government should be prepared at any time to deal with [any changes].”

Wei Jianguo, former Chinese vice minister of commerce, called the deal a "phased victory" for China, not only because of the terms included but also because it reflects a shift in the philosophy of US authorities - a departure from their arrogance when they initiated the trade war. 

"The trade war has taught the US a lesson. They finally realized that engaging in a prolonged trade war will bring no good to itself, and that ending it as soon as possible is their best option," he said. 

The world's two largest economies have been locked in a bitter trade battle for nearly two years. The dispute has seen both countries impose tariffs on hundreds of billions of dollars in each other's goods. 

Washington slapped three rounds of tariffs on Chinese imports last year, and a fourth one in September. Beijing hit back with tariffs ranging from 5-25 percent on US products. 

Soybeans are loaded into a grain cart during harvest in the US state of Illinois in 2018. Photo: VCG

The financial markets absorbed the news. By 11:19 pm Beijing time, the Nasdaq Composite Index was up 0.29 percent, while the Dow Jones Industrials rose by 0.28 percent. 

The A-share market soared on Friday, with the benchmark Shanghai Composite Index closing 1.78 percent higher on Friday, while the Shenzhen Component Index rising 1.71 percent. 

Keeping their promise 

Experts said they believe China will "mean what it says," as it is already pushing forward some of the missions covered in the phase one deal with concrete measures. 

For example, China is increasing soybean purchases from the US as well as advancing its schedule of financial opening-up, they said. 

Hu Qimu, a senior fellow at the Sinosteel Economic Research Institute, said that after China and the US reach a deal, agricultural exports (from the US to China) would be restored first. "This would be the easy part (for the two sides) to reach a consensus," he told the Global Times.  

The US Department of Agriculture revealed on Wednesday that Chinese buyers have agreed to buy 585,000 tons of US soybeans, the largest purchase from China since April.  

Bai said that it's not possible for the two countries to settle problems all at once. 

"The most important thing is that the deal should be implemented after being signed. (The US) should not go back on its promise," he noted. 

Incomplete ceasefire 

Despite the agreement, experts were not absolutely optimistic in the two countries' long-term relations as some of their fundamental frictions have yet to be settled. 

"The phase one deal is temporary reconciliation, not complete ceasefire, between China and the US. It's difficult for the two countries' relations to return to where they were before the trade war broke," Wang Jun, deputy director of the department of information at the China Center for International Economic Exchanges, told the Global Times.

In particular, the more thorny part of the negotiations, such as the US' challenges to Chinese government subsidies, has showed no signs of progress so far, Wang said. 

"I don't think they can get solved as easily as the issues covered in the phase one deals," he said. 

Experts also pointed out that the political pressure, such as impeachment threats that Trump is facing, is one important reason that pushed him to settle the deal with China, but his attitude might change if those political conditions evolve next year. 

"Still, all in all, we should strive to settle the frictions, whatever they may be, but also prepare for possible twists and turns," Wang said."

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Honored Advisor

Re: Well, one thing's for sure.....

If the figure comes to be ........... we are going to have to endure a huge increase in Reuters ASF articles, probably 4-5 a day.  I still doubt the whole story..... It has existed for a long time in the wild boar populations of asia..... and the articles that provide any verification of it are still chasing wild hogs.  

So I am expecting ASF for the Poor Chinese, congressional insanity,  massive turnout for the red hat lady rallies, the continued foreign transfers of tax dollars between taxpayers and american politicians using corrupt foreign leaders to launder the theft,  and the ever so anoying media politics of an election year.  Do you realize how boring the whole press driven nonsense would have been without Trump.  Isn't it interesting how a guy you would have never thought "clean" enough to stand the heat can't seem to produce a criminal offense while every politician in office more than 4 years cant seem to hide them. Not many living above swamp level in DC.

This mornng I read an interesting tweet (not from DC) about someone demanding that we keep the chemicals out of our food.   It was seen on the internet can and will be quoted as expert opinion.   But it shows how ignorant the public is.  Chemistry is the study of the elements that make up the known universe.  Food made by every generation is made of chemical elements.  I hope the author can manage to go without Hydrogen and oxygen..... H2O for a few months to show us how wonderful life is not without chemicals.  We have been reduced to journalist level thinking.