A senior market advisor with Total Farm Marketing says the market is closely watching China’s reaction to recent geopolitical events. Naomi Blohm says the country continues to have a strong influence on international trade flows.
“With the activities in the Middle East and the activities that happened a few weeks back in Venezuela, we’re really trying to cripple China’s access to crude oil in the sense that it will make them come to the negotiating table to trade with the United States,” she says.
President Trump is set to meet with President Xi at the end of the month to further discuss the details surrounding the U.S. and China trade agreement.
Blohm says China is ramping up its domestic production to prioritize national food security, but…
“The Chinese economy since COVID has really struggled to get back up and running to the pace that they want it to be,” she says. “China does need the U.S. as a trading partner, but we’re going to see exactly how quickly they need us and when.”
According to Blohm, the politics in China continue to drive U.S. ag purchases and she’s optimistic finalizing a trade deal could bring a boost to commodity prices.
Meanwhile, President Trump has also threatened to cut off trade with Spain after the country refused U.S. access to military bases for operations tied to strikes on Iran.
Ag economist Greg McBride with Allendale says Spain has been a growing export market for U.S. corn farmers.
“About 1.3 million tons last year,” he said. “I think we’re up over 2 million tons this year.” But Spain’s purchases have been inconsistent. “Not just for corn, but for soybeans, soybean meal, soybean oil, sorghum and that kind of stuff,” McBride said. “They are not one of our biggest buyers, but any demand we see out of them – especially on the corn side of things – is good.”
McBride says there’s been some global pushback. The EU has said to Spain, “We’ve got your back, we’re not going to let them push you around on this thing.” He says the European Union has suggested it could pull back from trade negotiations with the U.S.
EDITOR’S TAKE:
There is a great deal of uncertainty in the world at the moment. How it will all eventually play out is subject to a great deal of speculation. One thing is certain, as long as there is geopolitical unrest, the commodity markets will be very touchy. Any bad news could send prices spiraling in the wrong direction. On the other hand, any good news will be welcomed and send prices up. Although we don’t know when things will reach a new normal, when they do and certainty is restored, we look for things to improve rapidly. Americans are certainly keeping an eye on what is currently going on in the world, but rest assured your CAD team will continue to break it down as to the impact it will have on agriculture. Stay tuned for updates!
Until things settle down, perhaps your parts and service departments could offer some pre-planting specials to relieve some of the uncertainty and pressure farmers/ranchers are experiencing at this time of year. Mobile service direct to their operation – even better. Small things can make a big difference in how farmers/ranchers view your dealership.
