US soybean farmers hurting after China cancels contracts

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I realize China is attempting to manipulate American politics even more than Russia (and nobody seems to care because it’s against Trump supporters) And it could be that it will hurt some farmers. But it won’t hurt them all because a lot of farmers store grain until they get a favorable price change. Among sizeable grain farmers, that’s probably much more common than not. Even small ones can store grain at commercial storage facilities.

I don’t follow the grain markets anywhere near what grain farmers do, because I don’t raise grain or feed it. But grain farmer certainly do follow it closely, and I’m sure they know all about the South American crop failures. Probably a lot of them can see the “shorts” in the market too, and might even be in on it. I know farmers who “short against the box” (as it’s called in the stock market). You go short and pay very close attention. If you actually own the commodity, there’s not much gamble to it even if you’re wrong. You just don’t get the price you would have preferred if the market goes up. But since you own the commodity physically, you don’t have to go into a high-priced market to “fill your short”.
 
I don’t think that it is appropriate to compare China’s response to the initiation of a trade war to Russia’s covert operations aimed at stealing an election. That aside, yes, the Chinese are very strategic and are intending to put pressure on the administration - which is what can be expected since it is the current administration that is prosecuting a trade war with China.
 
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the whole Russia issue is kind of like the pot calling the kettle black. i don’t think they had much influence even if they did do something; Clinton lost this election on her own.
 
yes, I do, and I am constanly buying food from other countries.

My main point was that it sounded like the Chinese businessmes involved didn’t want to buy more soybeans anyway.
 
I think we can reasonably conclude that Russia is not the only one who attempts to influence elections and China is not the only one who tries to gain unfair trade advantage.

Neither thing is something the U.S. is going to “win” at forever. It’s just part of the hazard of being in a world of self-seeking individuals and nations. Original Sin has not been abolished.

Saying the current administration is prosecuting a trade war with China is a bit like saying Russia prosecuted a shooting war with Germany in 1941. We’re being shot up by China and have been for years, and Trump is only just now trying to deflect the bullets.

One has to realize the trade agreements with China were as much political as anything, probably more. Clinton approved “most favored nation” status for China. Bush did nothing to keep the trade imbalance from growing, probably to keep China quiescent. Obama just wasn’t very active in that sphere.

So now Trump is trying to push back.
 
The point is that the current administration initiated tariffs on China so China is using tariffs on soybean farmers to put pressure on the administration - that strategy should be anticipated.
 
HCTC said:
The point is that the current administration initiated tariffs on China so China is using tariffs on soybean farmers to put pressure on the administration - that strategy should be anticipated.
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In a formal and immediate sense, you could say we initiated tariffs, but in practice China has been using them and non-tariff barriers against the U.S. for a very long time; sometimes in combination.

So, for example, Caterpillar’s chief manufacturing plant is in Illinois. China imposed tariffs on their product that made them completely non-competitive, but said CAT could sell in China without the tariffs but only if the product was made in China. So CAT moved a lot of its manufacturing to China.

Stuff like that, and it’s not even “counted” as a tariff.
 
I’m going to quote Rick Brandenburger, manager of agricultural product producer Richland IFC, here: “I gotta believe that there are methods of working on differences without taking the hammer out.”

The Republican voters chose a candidate for their party that would give them disruption - because they wanted disruption. The problem with electing a political neophyte is that what happens is truly unpredictable. I doubt that most Republicans expected the uncertainty to continue day after day and month after month. I’m pretty sure that those whose livelihoods depend on the soybean industry in anyway expected what is happening to them.
 
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Ridgerunner said:
So, for example, Caterpillar’s chief manufacturing plant is in Illinois. China imposed tariffs on their product that made them completely non-competitive, but said CAT could sell in China without the tariffs but only if the product was made in China. So CAT moved a lot of its manufacturing to China.
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This brings up a very cogent point: this has been a formal policy of the Chinese for decades now, any company that wants to sell manufactured goods to the Chinese must build one or more factories there. Also anyone who wants to build a factory for export to the US must practice technology transfer. Then since the Chinese have never respected intellectual property rights or copyrights, such rights are simply not in their culture at all, they will steal the IP from that factory any which way they can. They do industrial espionage over here, but it’s a lot easier in their own home country when a multinational company does them a favor and builds the factory they want in their country.

That this has been going on at least since the 1980’s must be considered part of the greater picture of trade with China.
 
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Zzyzx_Road said:
This brings up a very cogent point: this has been a formal policy of the Chinese for decades now, any company that wants to sell manufactured goods to the Chinese must build one or more factories there. Also anyone who wants to build a factory for export to the US must practice technology transfer. Then since the Chinese have never respected intellectual property rights or copyrights, such rights are simply not in their culture at all, they will steal the IP from that factory any which way they can. They do industrial espionage over here, but it’s a lot easier in their own home country when a multinational company does them a favor and builds the factory they want in their country.

That this has been going on at least since the 1980’s must be considered part of the greater picture of trade with China.
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The problem I have is that nobody is forced to do business with China. China might have outrageous rules, but then don’t do business there. Why consumers should have to pay more because some busybody doesn’t like how China does business is a question nobody has been able to answer.
 
stinkcat_14 said:
The problem I have is that nobody is forced to do business with China. China might have outrageous rules, but then don’t do business there. Why consumers should have to pay more because some busybody doesn’t like how China does business is a question nobody has been able to answer.
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The problem is simple: it’s one born of demographics. Literally every large multinational company that makes goods looks at the Chinese consumer market and thinks, hey, over 1 billion potential consumers, that outstrips the US and the EU combined! So they get dollar signs (or euro signs) in their eyes behind rose colored eyeglass lenses and do whatever the Chinese demand as a condition of accessing those consumers. Not to mention the free trade agreements have to date allowed the multinational companies to arbitrage labor and environmental costs without detriment so the Chinese can create a consumer class capable of buying those goods. So that is an additional inducement.
 
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Zzyzx_Road said:
The problem is simple: it’s one born of demographics. Literally every large multinational company that makes goods looks at the Chinese consumer market and thinks, hey, over 1 billion potential consumers, that outstrips the US and the EU combined! So they get dollar signs (or euro signs) in their eyes behind rose colored eyeglass lenses and do whatever the Chinese demand as a condition of accessing those consumers. Not to mention the free trade agreements have to date allowed the multinational companies to arbitrage labor and environmental costs without detriment so the Chinese can create a consumer class capable of buying those goods. So that is an additional inducement.
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No doubt, companies are greedy and they will sell their soul for a profit. But that is not a problem that the US government needs to get involved in. If you don’t like how China does business, don’t buy Chinese goods, it is that simple.
 
stinkcat_14 said:
No doubt, companies are greedy and they will sell their soul for a profit. But that is not a problem that the US government needs to get involved in. If you don’t like how China does business, don’t buy Chinese goods, it is that simple.
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That’s a bit more difficult given how much manufacturing has been shipped over there.
 
Ridgerunner said:
Talked to a grain dealer yesterday who trades for a huge grain company. He says the “China” problem is, at most, a hoax. He says dealers are taking advantage of it to do short selling to drive the market down in order to pick it up cheaper later.
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If grain dealers are selling short, and their bet is correct, they will be the ones to profit - not the farmers. The farmers will not benefit from this situation. The gain by the dealers is matched by the loss the farmers had to take to sell their soybeans in the futures market, because they cannot afford to play the high-stakes betting game of not selling now to get the cash they need. As usual, the only ones to get more money are the ones who already have a lot and can take those risks.
I hope the grain companies are right and make a ton of money off China.
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None of which will benefit the farmers.
 
Maybe in the short run but if they get a S American crop to commence, the US farmers can be out for some time.
 
Obama wasn’t active because it’s not the President’s place to interfere with free markets, at least according to conservatives.
 
Sure they can do that. But the futures market is designed for short-term hedging etc. This helps in case of bad weather and stuff. Long-range planning is another story.
 
ProVobis said:
Obama wasn’t active because it’s not the President’s place to interfere with free markets, at least according to conservatives.
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I do find it interesting how conservative claim they believe in free markets, but then want the heavy hand of government involved once Trump is elected.
 
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