Wednesday, September 19, 2018

More Latin American Benefits From Trump Trade War

Because of Donald Trump's trade war, China is working to wean itself off U.S. soybeans.

The comments echo a growing confidence within China’s soybean industry and government that the world’s largest pork-producing nation can wean itself off U.S. soy exports – a prospect that would decimate U.S. farmers, upend a 36-year-old trading relationship worth $12.7 billion last year, and radically remap global trade flows. 
Just one prong of the strategy Mu detailed - to slash soymeal content in pig feed - could obliterate Chinese demand for U.S. soybeans if broadly adopted, according to Reuters calculations.
A bit breathless, I think, but the point remains that the Chinese government has a strategy here that will have long-term implications. As it turns out, those implications involve Latin America.

At the Kansas City conference, held by the U.S. Soybean Export Council, Mu highlighted reduced soymeal rations as part of a broader strategy, including seeking alternative protein sources such as rapeseed or cotton seed; tapping surplus soybean stocks, including a government reserve, and domestically grown soybeans; and continuing to boost soybean imports from Brazil and Argentina.
This is a recurring theme. Trump unsettles Latin America because he is unpredictable, but in some specific ways his economic policies benefit Latin American producers at the expense of the United States. In this case, U.S. farmers lose. I've been writing some variation of this in posts a number of times this year.


Unknown 7:58 PM  

What about Mexico being in talks with Brazil & Argentina to buy some of these same crops that they are currently buying from US farmers? Or has all of that kind of blown over since it appears that NAFTA is not going to be canceled?

Greg Weeks 8:14 AM  

I don't know, though my impression is that Mexico is actively looking for new markets because the US is too unpredictable right now. NAFTA isn't cancelled, but it's different and it is less permanent than it previously seemed.

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