US/Chinese Trade Talks Still Mired In Confusion
President Trump said a trade agreement with China might have to wait until after the U.S. presidential election in November 2020.
Trump was quoted in Reuters saying that he “has no deadline” for signing a deal with the Chinese.
The US and Chinese are working toward a smaller trade deal known as a Phase 1.
One of the major obstacles includes how the Chinese will purchase US agriculture goods.
Details of the Phase 1 agreement have been murky.
At the moment, a further 15% U.S. tariff on about $156 billion worth of Chinese imports is set to take effect on Sunday, Dec. 15.
FBN’s Take On What It Means: We believe that the recent comments by President Trump about the prospects of US/Chinese trade are not positive for the US farmer. As this column has said many times over the past year, we believe that for the US farmer the “devil is in the details”, and at the moment there are no details about US agricultural items. We continue to monitor the trade talks for information as it pertains to US agricultural commodities.
Australia Reduces Wheat Production By 20%
On Tuesday, Dec. 3 Australia cut its wheat production forecast by nearly 20% as another drought wreaks havoc on agricultural production.
Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is estimating production at 15.85 MMT, down nearly 18% from its September estimate of 19.2 MMT.
USDA has Australian production at 17.2 MMT
The ABARES forecast is nearly 35% below the 10-year average and as output is expected to fall to the lowest level since 2008.
FBN’s Take On What It Means: We believe that production difficulties with Australia’s wheat crop has helped provide recent support to the Chicago wheat futures, as this contract can serve as a proxy for world wheat. We also believe that compressing Australian wheat production and reduce exports which can be positive for US white wheat exports.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)
