Headlines:
China Says It Will Fight Back Firmly if U.S. Publishes Additional Tariffs
China will fight back firmly with “qualitative” and “quantitative” measures if the United States publishes an additional list of tariffs on Chinese goods, the commerce ministry said, accusing the U.S. of initiating a trade war. US President Donald Trump threatened on Monday to impose a 10% tariff on $200 billion of Chinese goods, saying the move was in retaliation for China’s decision to raise tariffs on $50 billion in U.S. goods. “Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions, and is a disappointment for the international community,” the ministry said in a statement on Tuesday. “The United States has initiated a trade war and violated market regulations and is harming the interests of not just the people of China and the U.S., but of the world,” the ministry said. If the United States publishes a new list of tariffs, Beijing will take strong countermeasures to safeguard the interests of China and its people, the ministry said.
Deadline Nears for House Attempt to Revive Farm Bill
The electoral circuitry to revive the Republican-written House farm bill this week looks like the mechanism of a Rube Goldberg machine. Republican leaders plan floor votes on two immigration bills, neither certain of passage, to generate support among hardline conservatives for the farm bill. A close vote is expected, just like the roll call that sank the bill a month ago. The farm bill may be the only chance for House Republicans to achieve their goal of welfare reform this year. Their bill would require 7 million or more “work capable” adults ages 18-59 to work at least 20 hours a week or spend equivalent time in job training or workfare to qualify for food stamps. At the same time, the bill would loosen farm subsidy rules by making cousins, nieces, and nephews eligible for subsidies and remove payment limits on some types of corporate farms. House Agriculture Chairman Michael Conaway expects a close vote, said Pro Farmer analyst Jim Wiesemeyer. Thirty Republicans — half of them from the conservative Freedom Caucus — joined a solid block of Democrats to defeat the farm bill, 193-213, on May 18. The conservatives used the farm bill as leverage to get a vote on immigration controls. Speaking on the AgriTalk program on Monday, Wiesemeyer said, “Not all of them [conservatives]” were certain to back the farm bill this time. “You just can’t count on them.”
Summary:
The stakes continue to rise between the US and China. It is important to note that the US is a consumption-based economy that is on solid footing whereas, China has an export-based economy with a shaky foundation. The stage is set for this cat and mouse game. Both countries stand to suffer from the fallout but economically we believe that China has far more at risk. This is perhaps what the current administration is banking on.
Prices went south in early trading and for much of the day after the trade tariff announcement this morning. Corn prices were pressured from spillover weakness in the Soybean complex and ideas of a big Corn crop this year. Several contract series made new contract lows. Late in the day a major bounce set in sending prices back up to session opening levels. Wheat futures prices traded lower in sympathy with the row crops and Winter wheat harvest activity. Pressure also stemmed from a strong improvement announced for the Spring Wheat conditions.
