Author Topic: world trade shifts, but shows no need to worry....  (Read 912 times)

Offline mountainmoma

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world trade shifts, but shows no need to worry....
« on: April 08, 2018, 08:35:57 PM »
News on shifting soybean trade echos what I read earlier in the week, ie., there is so much soybeans grown, and so many others who want to buy, it will work itself out.

My summary of Reuters article: China buyers have shifted some large orders to Brazil, this has caused Brazil prices to go up due to increased demand, which has some European buyers then shift to buying US soybeans. Both USA and Brazil are still selling. Europe and China are still buying. China is paying more to Brazil, US farmers are getting the usual price, but from Europe and not China. No loss for American farmers, a small win for Brazilian farmers, slightly higher prices for Chinese buyers (but not 25% higher), but consumers in Europe and China still getting what they need. USA gulf coast shipping has more business, and West coast shipping less, as the route and destination for the beans has shifted.

Four days ago, I read this as part of an Economic editorial/essay:

Daily news covered, let’s go Macro.

In the bigger sense, a lot of this is window dressing. We hear a lot about how “the world can’t feed itself if such and such,” but it’s feeding itself now: clearly it’s perfectly possible: if anything we may have too much! Same with trade and tariffs. So China refuses to buy American soybeans, but buys Brazilian, great: stick it to those farmers (mega corps actually) in the voting states! Show ‘em!

But here’s the thing: there are X hectares of soybeans grown on planet earth, and Y people who eat them. If China buys “The Beans of Brazil”™, then whoever bought Brazil last year won’t get theirs and will buy American. Same with steel, same with oil. If China now buys Saudi oil or Russian oil, then that oil is simply removed from Europe, and Europe must buy Norwegian or Venezuelan oil. But it’s the same oil, from the same wells, going to the same people: that is, FROM planet earth, TO planet earth, BY the people of planet earth.

There are strategies and prices, advantages and minutia down there, but in the big picture, the effect becomes more subdued than may appear. So China places tariffs, even boycotts Iowa corn, then that corn is sold to Europe instead. What kind of political pressure are they really bringing, aside from making headlines?

the rest of that essay is here

Of course, on the micro level, there are effects of changing trade. Just want to put out there that it isnt as doom and gloom as many news outlets portray. At least so far. We can add to this as more real news of effects on the global economy come in

Offline Carl

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Re: world trade shifts, but shows no need to worry....
« Reply #1 on: April 09, 2018, 12:35:34 PM »
  YES,the world still consumes at the same rate so a bit of a trade war is healthy to the economy. The US farmer feeds much of the world and soon ,US production with ,once again,be the standard of quality.