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South Central Iowa | When a country doesn't produce enough of a product it needs, but places a tariff on imports, that creates an artificial scarcity and prices rise in a free market and it rations demand. Go look at Cold Rolled Steel; tariffs were implemented and the domestic price has risen. It's done that because we don't create enough and with smaller supplies, value rises until demand is restricted to match it. Prices should rise in China because they cannot meet supply domestically or with those non-tariffed imports. There is actual scarcity coming in a few months in the Chinese domestic market if the U.S. does not export, but the lowering of domestic prices will not lead to the necessary rationing; they will run out quicker. This would stand opposite of the USDA projection this morning of slower growth in China.
With lower prices in China encouraging greater usage, where will China get the extra beans they need this fall?
Their government is suppressing the Dalian likely; trying to create an alternative reality. But that isn't actually what they need if they do intend on not importing beans and giving a price that will actually encourage greater than normal expansion in SA. This price doesn't do it. They may be $2 premium to the U.S. currently, but that isn't any different than the last 4 years and significantly lower than before. | |
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Dalian (China) Soybean Prices
