Collateral Damage - A Demand for Reopening of Chinese Markets

In her article posted on May 22, 2019 by the National Public Radio, Amy Mayer discusses the collateral damage done to both Chinese and U.S. economies, particularly agricultural commodities, as a result of the ongoing trade spat between the White House and Chinese counterparts - and now the threat of tariffs on trade with Mexico.

As the article reports, advanced fertilizers and farming practices have allowed U.S. farmers to outpace world production in several different crop arenas, leading U.S. producers to provide some of the world's least expensive crop prices as a result of excessive production. The same excessive production has resulted in the U.S. crop industry looking towards other new markets, both domestically (biofuels) and internationally.

This has also led agriculture to be one of the first areas to be impacted as a result of diplomatic policy, whether positive towards expanded trade, or negative, as a result of conflict or trade wars (as we are now seeing).

Despite a 14% increase of soybean exports to Europe, this increase in soybean exports has been offset by the decrease of soybean exports to China. Soybeans is not the only area affected, either, as the dairy industry has also felt a heavy impact.

With a second agricultural bailout being proposed by the Trump administration, many farmers are voicing out that the true resolution to the collateral damage being felt, is the reopening of the Chinese markets to American agricultural products. However, as long as the Trump administration continues to throw barbs with their Chinese counterparts, agriculture will continue to suffer collateral damage until the trade war has ended.

The only saving grace this year has been.... the weather.

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