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The US has the Upper Hand in Trade War

Posted 10/23/2018 8:31AM CT | Frank J. Cholly

We are not just the world’s largest economy, we are also the world’s largest importer. China needs us more than we need them. China struck a blow to our soybean farmers, no doubt about it, they take at least 60% of our soybean exports. Chinese demand for soybeans is not going away, in fact its demand is likely to grow in the future. They may have to source their purchases somewhere else like Brazil. Brazil doesn’t have enough supply to meet China’s needs. Furthermore, China may not have adequate supplies to hold them over until South American crops become available. China is already digging into their State Reserves. China needs the food. If South America has any weather issues resulting in smaller crop size, we will see soybean prices have a very sharp recovery bounce. When push comes to shove, China will pay whatever the market bears.

Other says of China’s growing concern over the strength of their economy is all the “stimulus” they are providing in effort to support their markets. If China is in this Trade War for the long haul…they will not win. That’s just my opinion. Time will tell.

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Frank J. Cholly

Senior Market Strategist
Frank brings his clients more than twenty-six years of commodity futures experience. He was a member at the Chicago Board of Trade for 10 years where he filled orders in the grain and financial pits. Frank was also a Lind-Waldock's floor manager for ten years and later joined on as a commodities broker.
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