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Now that the initial celebration is over, it is time to get down to business once again. The only problem is, no one is sure when that business will begin. Details are a bit sketchy as to what all was agreed to in Buenos Aires last week, and there was even a bit of uncertainty if the 90-day period to work out a new agreement begins on December 1stor January 1st. (I believe it is the former) One thing is for certain though. We have not lowered our tariffs on Chinese goods, we just promised to not increase them further on Jan. 1, nor has China, at least as of yet, lowered tariffs on U.S. imports. As it stands right now, U.S. beans are around $60 MT higher priced than Brazilian beans. Understandably, no one is rushing in to purchase just yet as they wait and see if/when the 25% tariff is reduced. Ideally the sooner, the better as the window of opportunity will be narrowing quickly before new beans are available from Brazil. In case you want to keep track, marketing year to date, we have shipped 13.3 MMT compared with 22.9 MMT last year, so we have a little catching up to do.
Agriculture is not the only industry that is waiting anxiously for China to lower tariffs as the auto industry has suffered as well. Note that General Motors sells more cars in China that it does in the U.S. and the current 40% tariff, which was bumped up 15% in July, has created a pinch, not to mention the fact has prompted manufacturers to look at shifting production outside of our borders. Add to the Chinese tariff, the current additional tariffs here in the U.S. on steel and aluminum, which has translated to significantly higher prices for the products compared to the rest of the world and it would seem obvious why these companies are struggling.
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