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| I'm going to inject some politics in an objective way. That is, whether we want to or not, we need to accept that international trade politics is the only significant factor in play at the moment and we need to think through how this is likely to play out.
First, the Chinese aren't going to just suddenly cave into trump's demands. Even if they wanted to they will try and extract some punishment first.
Second, They have no reason to even be worried about access to the US supply until late this summer and then not seriously until Oct. If you look at a chart of soybean sales to China, they don't start seriously for another ten weeks, mid Sept.
Third, the target date for the Chinese is Nov. 5th, election day. They will squeeze the Midwestern Republicans and by extension the administration as hard as they can until then.
Fourth, unfortunately, the other buyers will have no incentive to buck the price trend until the Chinese come back into the market. Why should they? It's a windfall for them.
So, unless the administration trade negotiators come to some understanding with the Chinese or some weather event occurs, I suspect that we're in a tight spot for another 4 months at least.
Furthermore, if I was the administration, I wouldn't wait until it becomes a crisis. I would start an emergency program to get storage built, low interest loans, etc. And I would start signing up producers into the loan programs now. We all know how slow the Farm Service Agency can be. They shouldn't wait until everybody's broke before they do something. Not only that, if the Chinese see the US government taking active steps to mitigate the problem it will reduce their leverage.
Will it completely solve the problem of a 25% tariff? No! but it might take the edge off it enough to reduce the economic damage and the political consequences.
Edited by farmer4321 6/27/2018 18:52
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Chart Guys wow do we sit going into this report
