Sputnik has discussed the progress in US-China trade talks with Ted Seifried, chief market strategist at Zaner Group in Chicago.
Sputnik: I’m reading this and I’m a bit perplexed because in lots of ways there’s good news and then there’s sort of holding news that they’re obviously going to continue speaking. It’s been very terse this relationship, this trade war in the last 9-10 months. In your view what’s your feelings generally about the sort of statements that are coming out?
Ted Seifried: Yes, they all seem very, very positive. It very much sounds like we’re getting very close to a deal. The Chinese seem very willing to get something done and they’re, for lack of better terms, looking to throw a lot of money at this deal.
It seems that we’re going to get something done; it seems that it’s something going to be very good for American agriculture for the time being and then we'll see where it goes from there.
I don’t think that's going to be at the loss of Brazil. While we do know that the Chinese demand for soybeans has dropped with the African swine fever that they've been experiencing, I believe they want to build State side. I believe they want to do this because they're worried that they might have the same problem again in two or three years if they’re not able to uphold their promises on IT and IP. So they want to build I would think maybe 30, 40 or 50-million metric tonne State reserves in case something like this were to happen again and they’re not caught unprepared.
Sputnik: It's very interesting on the face of it when we see China proposing to buy $30 billion worth of US agricultural products, what’s the rationale behind it? If you get to the nitty-gritty obviously this is high-level negotiations that have been going on nearly 12 months now, are they proposing to increase this in terms of retaining certain other products and services like intellectual rights in China, the area that’s been so pervasive. What's the rationale in increasing this cause it’s come out sort of out of the blue so to speak, hasn't it?
Ted Seifried: It really has and it really shows the aggressiveness of China and that’s the interesting thing about it. It really does feel like China is trying to give everything in order to get this deal done and to get it done soon.
It feels like they want to get this deal done now. That’s very interesting because you feel like there should be more negotiations, that there should be more of a pushback from China but we’re not getting that.
And again, I think the reason for that is they want to get this market opens so they can come in and buy as many American soybeans as they can.
Sputnik: What about the analysts saying about China’s proposal, could this be the deal that ends all sorts of deals for the end of the trade war, for this one that we’re talking about, and does the deal actually have the potential to do that?
Ted Seifried: I think we’ve done everything we needed to do and I think it really sounds like we’re going to have a deal that ends this trade war. And like you said, I think that really helps Trump's popularity.
I think Trump is very likely going to run for a second term and I think he would win. His constituency, the American farmer, rural America, while they’ve been the ones that have been hurt most by this trade war they’re also the ones that stand to benefit the most. So by getting this done, by getting this big victory I think he’s going to have a very good chance of getting re-elected.
I really question the idea that China can make the necessary changes in IT and IP. This is something that is sort of entrenched in their culture. So we’re talking about changing the culture of China. I’m not sure that's so easily done as shaking hands and saying, “This trade war is off, we're going to buy a whole bunch of soybeans” that’s great, but in the long run I don’t know this problem is going to be solved this easily.
Views and opinions expressed in this article are those of Ted Seifried and do not necessarily reflect those of Sputnik.