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November 08, 2019 | FBN Insights | Kevin McNew

U.S. and China Agree to Roll Back Tariffs

“Phase One” trade deal is smaller and initial component of broader trade negotiation

U.S. and China Agree to Roll Back Tariffs in “Phase 1” Trade Deal

China and the United States have agreed to roll back tariffs on each others' goods in a "Phase One" trade deal if it is completed.

Both sides have agreed to the clause which is one part of a larger negotiation.  

The “Phase One” trade deal is the smaller and initial component of a broader trade negotiation that the two countries are working on.  

Both the U.S. and China have used tariffs as a political weapon during the prolonged trade war that started in March 2018.  

Currently, China has implemented steep tariffs on key U.S. agricultural commodities (i.e., soybeans and pork).  

Currently the U.S. is scheduled to implement tariffs on Dec. 15 for about $156 billion worth of Chinese imports that includes cell phones, laptop computers and toys.

FBN’s Take On What It Means: At FBN we would like to see details about what items that the Chinese would eliminate their tariffs on. At the moment there are no details about what goods, much less if any agricultural items, the Chinese are willing to reduce tariffs on. While we believe that reducing tariffs is a positive, at FBN we remain focused on the details and what they mean to the U.S. farmer.                     

                  

ADM Offers Free Drying at Three Plants in Iowa and Illinois 

ADM is waiving the fees it charges farmers to dry grain at three of its Midwestern corn processors as it seeks supplies to keep the plants running at optimum levels through what is a slow, wet harvest.

ADM’s free drying is for corn at 19% moisture rate or less and is available at the wet mills in Decatur, IL; Cedar Rapids, IA; and Clinton, IA.   

The three plants can produce an estimated 1.08 billion gallons of ethanol a year. 

According to the USDA’s weekly Crop Progress report, as of Sunday Nov. 3, 53% of the U.S. corn crop has been harvested, compared with the five-year average of 75%.   

FBN’s Take On What It Means: We believe ADM’s offer of free drying to farmers can be a positive that can help reduce farm level costs. We also believe that reason that ADM is offering the service is to: A) help insure corn supplies for their ethanol plants and B) to help gauge the quality and volume of local supplies to help manage basis. Please contact your local FBN farm market advisor (FMA) for more information about local basis near these three locations.    

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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