Rest of the Story: The 800-lb. Gorilla

09:38PM Sep 10, 2018
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In September 2011 I wrote a TP column entitled “the 800-lb. Gorilla”. I referenced a meeting I had years ago with a Chinese group regarding the insatiable demand of China.

Definitions associated with term Gorilla is of “an overbearing entity in a specific industry or sphere of activity. A seemingly unbeatable presence always to be reckoned with; whose experience, influence, and skill threatens to defeat competitors with little effort.” The Chinese gentleman’s comments put chills down my spine then and continue to do so today. There could be serious consequences in the making that will affect the methodology of global grain flow or President Trump is far more insightful than most believe.

President Trump keeps telling us that U.S. Agriculture will be far better off than it was before the tariffs and renegotiation of trade deals. Perhaps he knows full well that it is in our agricultural best interest to be associated trading with multi mini-gorillas rather than one big one. Expanding global access to other countries to increase their trade under the umbrella of making up for loss of Chinese demand may be an underlying motivation. I can see the benefits, but long term has serious implications short term.

In the back drop we cannot ignore the fact that 40% of global growth in soybeans and soybean equivalents (meal) is coming from the non-Chinese sector. That sector has to double to offset the lion’s share of China’s demand for US soybeans as recent as a year ago. Interestingly it took 20 years of excess corn stocks before a pseudo energy bill created a government mandated 5.0 bil-bu corn program that helped alleviate corn surpluses.

Interesting times in which we live.

To see the 2011 column click here.

Jerry Gulke

phone 480-285-4745; 707-365-0601