Bat­tle for beans

The Oklahoman (Sunday) - - BUSINESS -

Chi­nese soy­bean farm­ers, im­porters and pro­cessers say they are un­con­cerned about po­ten­tial Chi­nese tar­iffs on Amer­i­can soy­beans.

Two sta­ples of the Ok­la­homa econ­omy — oil and agri­cul­ture — are fea­tured in this week's edi­tion of Fu­tures File, our weekly com­modi­ties wrap up.

Drum­beats of war send oil higher

Crude oil prices ex­ploded to the high­est price since 2014, gush­ing to $67.76 per bar­rel on Fri­day morn­ing. The pri­mary fuel for this rally was the ris­ing ten­sion in the Mid­dle East as Pres­i­dent Don­ald Trump con­sid­ers mil­i­tary in­ter­ven­tion in Syria.

Trump has threat­ened Syr­ian dic­ta­tor Bashar al-As­sad in re­sponse to re­ports that As­sad’s regime again used chem­i­cal weapons against civil­ians. As­sad is sup­ported by Rus­sia, which means that an at­tack against Syr­ian gov­ern­ment troops could hit Rus­sians as well, po­ten­tially re­sult­ing in an es­ca­lat­ing mil­i­tary con­flict.

Fears of a con­flict spi­ral­ing out of con­trol have traders on edge, es­pe­cially since other ma­jor oil pro­duc­ers in the Mid­dle East, in­clud­ing Saudi Ara­bia and Iran, have vested in­ter­ests in Syria as well, mak­ing it a po­ten­tial pow­der keg.

These fears are ex­ac­er­bat­ing an al­ready-tight crude oil mar­ket. Glob­ally, stock­piles of crude oil have been de­clin­ing for the last two years af­ter pro­duc­tion cuts from ma­jor pro­duc­ers. In 2016, Rus­sia and the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries (OPEC) agreed to re­duce oil pro­duc­tion to raise prices, a strat­egy that is fi­nally pay­ing div­i­dends for oil pro­duc­ers as oil ap­proaches $70 per bar­rel.

Farm aid on the way?

In the on­go­ing trade dis­pute with China, Amer­i­can farm­ers seem to be the most likely ca­su­alty, as China’s re­tal­ia­tory tar­iffs have been aimed heav­ily to­ward U.S. ex­ports of soy­beans, pork and other agri­cul­tural prod­ucts.

This ini­tially prompted nu­mer­ous farm groups to speak out against Trump’s re­cent trade ac­tions against China, the sec­ond-largest buyer of U.S. farm goods. How­ever, Trump has pledged to shield Amer­i­can farm­ers from harm and is propos­ing to cre­ate an aid pack­age that could sup­port farm­ers reel­ing from the trade dis­pute.

Ad­di­tion­ally, the Trump ad­min­is­tra­tion seems to be re­vis­it­ing other trade deals like the North Amer­i­can Free Trade Agree­ment and the Trans-Pa­cific Part­ner­ship to boost agri­cul­tural ex­ports to our nonChi­nese trad­ing part­ners.

Op­ti­mism about bet­ter trade prospects helped boost soy­bean prices to a five-week high on Fri­day morn­ing near $10.67 per bushel.

Aside from trade, many Mid­west­ern farm­ers are be­gin­ning to worry about the spring plant­ing weather; cool, wet con­di­tions could de­lay plant­ing and re­duce crop yields this year, a fear that is help­ing to boost soy­bean prices.

Opin­ions are solely the writ­ers'. Walt and Alex Bre­itinger are com­mod­ity fu­tures bro­kers with Paragon In­vest­ments in Sil­ver Lake, Kansas. They can be reached at 800-411-3888 or www. parag­o­nin­vest­ments.com. This is not a so­lic­i­ta­tion of any or­der to buy or sell any mar­ket.

[AP PHOTO]

Syr­ian chil­dren play Thurs­day in the court­yard of the 7th cen­tury Umayyad Mosque in Da­m­as­cus, Syria. The streets of Da­m­as­cus were packed with people Thurs­day evening ei­ther go­ing out to shop in one of the city’s main mar­kets to hang­ing out with...

Walt & Alex Bre­itinger www.paragon in­vest­ments.com

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