Just Talk of Trade Deals Boosts Market and Optimism

Nov 2, 2018  | 3 min  | Ep4411

Whether it’s a red wave or blue wave, trade remains a top election issue for farmers and ranchers. The U.S. has already abandoned the buying power of 500-million people and a combined GDP of $13.5 trillion by exiting the Trans-Pacific Partnership.

Paul Yeager has more on the landscape rural Americans are left to navigate before the election.

For the first time in three decades, U.S. farmers planted more soybeans than corn. As the nation’s soybeans come in from the field and head for the bins, U.S. farmers are left to wonder where their product will end up.

This chart from USDA reveals a dramatic fall off in U.S. soybean export sales to China - it’s traditionally the largest buyer of domestic beans. The peak came in the fall of 2017 at more than 2,000 metric tons. Sales to China over the last seven weeks combined failed to equal a single week of last fall’s soybean sales.

Thursday morning, Presidents Trump and Xi talked on several topics including trade. The soybean market immediately bumped up 25 cents.

Overall, soybeans are only a small part of the trade puzzle. The U.S. still sees intellectual property as a major sticking point between the two countries.

During a White House event Wednesday, President Trump reiterated the U.S. economy was growing on his watch and how he is committed to re-working trade deals.

President Donald Trump: “But they've taken advantage of us on trade. They've taken our money they've taken our jobs and we're stopping that. And we have to take care of I have the expression ‘America First’ and the fact is we have to start taking care of our own country."

The president continued to say China’s economy is softening.

China’s manufacturing activity fell to a two-year low in October as domestic demand weakened. The official Chinese government report added to the building pressure for a trade agreement with the United States. However, most of Asian giant’s economic challenges may be tied to slumping auto and real estate sales. Beijing tightened lending controls last year to help rein in a debt boom.

China’s Xi met with his Japanese counterpart Shinzo Abe late last week as the two countries look to find common economic interests. Abe told the group they need to develop a new level of a free and fair trade system. Earlier this fall, the U.S. and Japan agreed to launch bilateral trade talks. Japan carries the third-largest trade imbalance with the U.S. after China and Mexico.

For Market to Market, I’m Paul Yeager.

Grinnell Mutual Insurance