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Donald Trump and Xi Jinping met, had dinner together on Saturday night at the G20 in the Argentine capital, Buenos Aires, announced a truce in the trade war that already gives its first signs from the beginning The First result was the following: Shy and still fragile prices for soybean prices on the Chicago Stock Exchange. In Brazil, prices are virtually maintained.
"It's a truce that's already aligned, it's not changing much, but it's already showing a solution, even if it's still a long way off," says SIMConsult director and consultant Lions Severus.
Experts say the market is only optimistic about upcoming negotiations, especially in the 90 days of a momentary "ceasefire". Without agreement, China should not, at least at this stage, buy back large volumes of US soybeans and maintain the pace of global soybean trade before the trade war.
The US and Chinese Presidents proposed to suspend customs duties and, therefore, the three-month retaliation, and the practical effects of this measure have not yet been completely absorbed, understood and taken into account . Speculation continues mainly on premiums paid by Brazilian soy from the point of view of the Brazilian producer.
On Monday, the shortest delivery positions – December and January – in the port of Paranaguá fell by 11.54% to 1.15 USD for stocks on the Chicago Stock Exchange. On the contrary, February 19 was the same as $ 1.15, but up 15%, while March 19th remained stable at $ 0.70 on the CBOT.
However, the withdrawal of premiums comes. even with the 25% Chinese tax on US soy still maintained. "So the premium for braised soy is out of date," he says.
In addition, the director of LucrodoAgro, Eduardo Lima Porto, describes in more detail the current situation of relations between China and the United States and their impact on the formation of prices in Brazil.
"The 25% tariff on US soybeans will continue to apply, in addition to the 3% import duty applicable to us, that is to say, It will have to pay 28% of the CIF price of soy, which is composed of: 1) Ex-factory price, considering that the product is standardized for export + 2) Freight to the port + 3) Fresh Fobbing + 4) international freight + 5) insurance = CIF price, explains Porto.
Thus, more than that, "the premiums must, to a certain extent, reflect this additional cost of price parity with the American soybean, while staying a little underneath so that it's worth for the buyer, "completes the leader.
The image of Reuters shows that the flow of ships from Brazil to Asia is still intense
Analysts and consultants therefore do not believe, even without the signed and formalized agreement,
"I believe that Chicago is still walking slowly, the rewards are coming back very little back, because this truce shows that it's much more than a trade war, it's a search for hegemony . In the next 90 days, we will still have a lot of price volatility and volatility on the Chicago Stock Exchange, which can offer tremendous sales opportunities to the Brazilian producer, "says Afi Agribusiness consultant Enio Fernandes. Agronegócios
Fernandes further emphasizes that the demand for soybeans is quite intense, that it extends to the whole soybean complex and that it reaches animal proteins, which which allows to maintain the balance of prices and premiums.
According to the consultant, who shares the opinion with the market badyst, Marlos Correa, of Insoy Commodities, the withdrawal of the premiums is "natural" at the moment, especially for the time available, where there is almost no soybeans to trade in. Brazil, stocks are practically nil. "There are no big takers price for the moment, "said Correa.
Meanwhile, buyers are already considering a good crop that is growing in Brazil, reaching record levels and up to 15 days earlier this season. And it is an offer with which China already counts. An INTL projection from FCSonte reported on Monday brought the estimated Brazilian harvest to 120.21 million tonnes, up from 120.19 million tonnes previously.
The fact is that there is still no agreement and that the waiting time in the world market for soybeans remains. "And the market will always be totally focused on the next steps of China and the United States in the next 90 days.We have not yet emerged from stalemate," said Camilo Motter, economist and badyst at Granoeste Corretora de Cereais. "But, of course, with the implementation of an agreement, the premiums could rather drop a little more in Brazil," he adds.
Uncertain Environment
In this still uncertain environment, understanding the true intentions of Trump and Xi with the announcement of this truce will come only with the knowledge of the details . Both are tough leaders who have treated the subject without yielding to the pressures of the opponent.
"Trump likes to leave these events with style saying that he's done a great job, but he's just postponed his decision until later.I still think Chinese people can buy more money from United States, but avoid technology transfer and put an end to the alleged robbery of Intellectual property, if this happens, will not be reached in 90 days ", says economist and professor of Inspper, expert Chinese, Roberto Dumas Damascus.
The United States Expects China's Immediate Action on Trade Commitments
The Chinese have offered more than $ 1.2 trillion of new trade commitments, announced Monday the Treasury Secretary Steven Mnuchin. Kudlow said that this number constituted a broad reference value and referred to private transactions of US goods purchases, subject to market conditions.
China also pledged to start immediately removing tariff and non-tariff barriers, Mr. Kudlow said: "We expect these rates to be reduced to zero," he said. told the press.
For the first time, Americans will gain majority control of Chinese companies. Mnuchin said the nature of intellectual property has changed and that it should help address key US concerns about intellectual property theft and forced technology transfers.
No commitments have been agreed in writing and the details will still be settled. in Buenos Aires compared to previous discussions, Xi offering a clear commitment to open the Chinese market to US companies.
This is the first time we have committed ourselves to a real agreement, "Mnuchin told CNBC.
Kudlow, director of the National Economic Council, said Mnuchin and his US representative Commerce were Robert Lighthizer., Had two private talks with Chinese Vice Premier Liu He in Argentina and told them that Beijing would act immediately under the new commitments.
"The story of the promises Chinese is not very good. . And we know that, "said Kudlow," but I will tell you this: President Xi has never been as involved as now. "
Kudlow said," They can not slow down, stop, but wander. The truce boosted global markets on Monday as global equities rose to their highest level in about three weeks. On Wall Street, the S & P 500 <.SPX> jumped nearly 1%.
Trump named Lighthizer, one of the most virulent critics of China in the United States, and was a member of the United States. government to oversee the new round of trade talks with China, officials said.
The appointment of Lighthizer, which has just sealed a new deal with Canada and Mexico, could mean a tougher line in the negotiations with Beijing and represents a change from previous conversations in which Mnuchin played a central role .
"He is the hardest negotiator we have had in his post and he will prepare and withdraw the tariffs and the closure of all the structural practices that hinder access to the market," said Monday on public radio national Peter Navarro, White House Assistant on Foreign Trade.
Mnuchin will also be very involved alongside the Secretary of the Treasury in charge of financial and foreign exchange issues.
The White House is stepping up its efforts to get other countries to produce more vehicles in the United States. Lighthizer and other officials, including Kudlow, are due to meet with German automakers on Tuesday, including senior executives of Volkswagen
Chinese regulatory authorities have not not responding to requests for comments on Trump's tweet about car rates. Neither country had mentioned car rates in its meeting announcements at Trump-Xi.
On Sunday, Trump tweeted that China had agreed to reduce import duties on cars made in the United States.
Brazilian soybean sector is preparing for the eventual end of the trade war between the United States and China
SÃO PAULO (Reuters) – Brazilian soybean producers anticipate lower prices if China suspends tariffs on US soybeans in March and the two largest economies in the world can be freed and the American countries from the South will harvest their crops.
If the 25 percent tariff imposed by China on US soybeans were abolished in March, the US market could flood the market, like cereals from Brazil and the United States. Argentina, said the executive director of the Aprosoja-MT producers' badociation, Wellington Andrade.
If the tariff is suspended in March, the decision could coincide. with the period during which the Brazilian harvest will be advanced.
"If (customs duties are eliminated) from March, you recover well at the end of the soybean harvest.At this time, you drain grain.How do you sell soybeans? Washington and Beijing have signed a 90-day truce on the imposition of new tariffs at Saturday's G20 meeting, bringing the soybean futures to the US at the highest level since Chinese President Xi Jinping also promised to
Even though futures prices were rising in Chicago, prices at the port of Paranaguá fell by $ 0.10 a bushel and the Brazilian currency fell, making soy prices less attractive to farmers, said Frederico Humberg, CEO of AgriBrasil.
As Brazilian prices approach US prices, as China eliminates tariffs, Brazilian exports toChina will tend to be limited in the short term as Brazil is about to start harvesting in the second half of December.
The trade war may have created short-term opportunities, but it is bad in the long run, said the general manager of the National Association of Exporters of Cereals (Anec), Sergio Mendes.
"If China opens all the floodgates of soybean exports, it is clear that we will not be able to export at record levels this year," said Mendes.
Brazilian soybean exports are forecast to close 2018 to a record 82.5 million tonnes, compared with about 68 million tonnes per year
In the first eleven months of the year abroad reached 80.1 million tonnes, a peak of 22.6 percent compared to the same period in 2017. Of this total, 82 percent went to China.
Mendes thinks that, whatever the conditions of a possible agreement, soybean prices could still fall in March, because the great harvest of b
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