Another $200B in Tariffs on China?
Jul 10, 2018
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
Late Tuesday it is becoming more cleat that President Trump is seeking to impose an additional $200 Billion in tariffs on imports from China. This comes in addition to the original $34 Billion in tariffs imposed on July 6th. The treat of tariffs against and from China have been a massive black cloud hanging over the soybean market. How will this new round of tariffs be received?
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On July 6th a 25% tariff on US soybeans imported to China went into place as a retaliation to US tariffs on China. This is certainly a concern for US soybean sales as China is by far the world's largest buyer of soybeans. It has been argued that China will continue to need to buy and/or will displace demand from other countries to the US. With production issues in Argentina and Brazil having limited excess stocks this may be mostly the case in the short run. The bigger question will be what happens after the next South American growing season.
A deeper escalation of the US trade war with China may or may not increase the percentage of tariff US soybeans imported to China. It may be difficult for China to increase prices on their domestic needs in the short run. There have also been some reports that Chinese state owned entities buying US soybeans for state reserves would receive a 25% rebate, but it is very unclear (to me at least) if this is true or how long it may last.
But the problem here may be the long term outlook. The escalation of this conflict may be signaling that it is here to stay. If anything it suggests we are further away from a solution. If we are in this for the long haul it may have a profound and lasting effect on soybean trade between the US and China.
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Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit. Find me on twitter - @thetedspread
August Soybeans Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
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