More on the wolf wankers today at SCMP:
Since China imposed tariffs on Australian barley and banned exports of beef from four Australian abattoirs three weeks ago, Australian Trade Minister Simon Birmingham has tried unsuccessfully to get in touch with his Chinese trade counterpart, Minister of Commerce Zhong Shan.
This creates an unusual situation for two countries with strong trade relations, and only adds to growing suspicions in Australia, the world’s most China-dependent economy, that the tariff and bans were punishment for Canberra’s political support for an international inquiry into the origins of the coronavirus.
During a radio interview on Monday, Birmingham expressed his disappointment again at not being able to speak with Zhong despite trying several times to place a call. It is understood Birmingham’s request for a phone call “could not be facilitated at this time”.
Jolly good. We’re moving on, via Bloomie:
Australia’s farmers are on a mission to find fresh buyers for their barley, and are targeting bigger exports this year even after the country’s top customer, China, slapped tariffs of about 80% on the grain.
Markets in Japan, Vietnam, Indonesia, India and Saudi Arabia are among those being scoured for new clients or eyed for increased shipments of the cereal, which is mostly used in brewing and livestock feed.
“What we should take out of international trade and recent events here in Australia is that exporters, in simple business principles, should not have market concentration,” Agriculture Minister David Littleproud told the Rural Press Club of Victoria Thursday. “It’s important that we spread the risk.”
…Australia is likely to see a bumper winter crop season following widespread early rains, potentially lowering prices. Rabobank expects barley exports to rise as much as 13% to 4.5 million tons in 2020-21.
…China has been by far the dominant buyer in recent years, taking 5.7 million tons in 2017-18, though that dipped to 2.5 million tons in 2018-19. That’s well ahead of the next buyer, Japan, which purchased 746,000 tons in 2018-19. About 3 million tons is used domestically.
Most new buyers will be seeking barley for feed, which doesn’t fetch the same premium as malting barley, said Nicholas Orssich at INTL FCStone. With prices for Australian grain coming down recently, it’s looking more appealing for buyers in Southeast Asia and Saudia Arabia, though the appreciating Australian dollar will be a headwind, he said.
Exactly as expected. Capturing new market shares costs a little upfront then it all shakes out over time to something like it was. China will still need the barley and it will be displaced from elsewhere opening new opportunities for us.
This is the way of commodity markets. They are fungible. The product gets shipped regardless of wolf wankers in Beijing.
We don’t need China. China needs us.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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I thought we had a free trade agreement with China. Time to terminate it?
There are certain items exempt from tariffs, yes.
We were bent over …….. or we bent over
Quick one –
Ought the FIRB take this into account apropos the mooted take over of Lion by Mengniu or has that already happened?
Except for iron ore and coal. You couldn’t force feed it into other markets but it’s also the lifeblood of the Chinese economy.
Good. It’s a big world out there and it’s beyond time to eliminate this foolish concentration risk. We just got fat and lazy having a voracious customer on speed dial.
The Locust Plague that is destroying crops in South Africa, Middle East, India etc will ensure plenty of Oz food products can be exported to those places in future to take up slack from the Chinese boycott. If crop destruction is so excessive from the locust plague, global demand could outstrip supply placing China is a vulnerable food security position.
That would amuse me, great loss of face that would be!
Had further dealings with a Chinese entity this week and the more dealings I have the curiouser it all seems. From overpaying for foreign assets / land, to not appearing to care either way whether they make any profits on foreign investments (or, at least, the profits they hope to make are not financial). It feels a lot of the time that the things they are do are strategic in nature, but it does mean they are burning through a lot of capital, the source of which I am not certain – that of the Chinese state ultimately, I guess.
CCP Printer go Brrr
Well, that’s their issue. They’ve effectively created so much fiat it’s blowing back in their face just as the USDs have stopped flooding through the door. No wonder there are so many foreign asset sales by Chinese entities – they’re having to retreat just to shore up the domestic currency.
In their system money doesn’t have value in an of itself, it only has political value. Which is all well and good but leads to capital misallocation on an epic scale. If they don’t reform, which they already have made the decision not to, then eventually it will implode. Pete Zeihan has a great way of explaining their current predicament.
https://zeihan.com/a-failure-of-leadership-part-iii-the-beginning-of-the-end-of-china/
https://www.youtube.com/watch?v=EeGX105X7ac
Thanks Scott, I’ll take a look for sure
Laing O’Rourke are claiming that C h i n e s e steel is 75% cheaper than local on the Darwin Defence Base project. Lots of gristle on that bone for an enterprising journo…pity there aren’t any.
They are the world’s largest buyer of barley by a long shot. Its going to hurt.
Also we are not the largest producer or barley.
Hate to say it but Australian Barley producers are stuck between a rock and a hard place.
Vote 1 Jim’s Government and we’ll send the Chinese home and reclaim land without compensation.
Maybe. Its stock feed – and that has a plethora of alternatives. Most likely no one will be interested as they already have their suppliers.
Barely being sold to China is however a secondary crop – its grown in between other crops and as a low value rotational feed crop – so its of extremely low value and most farmers either cancelled it as a crop when they heard the news or are generally unfazed by it they have plenty of alternative options.
Very much doubt that your conclusion that we can simply switch to other markets holds up. We can switch to other crops, and its not a big issue agreed.
However your claims of losing Chinese buyers is no big deal in the world commodity and export market as where one buyer falls another emerges is a false paradigm indeed.
There wont be a replacement for Chinese tourists, nor Chinese students with the same spending power. They can be replaced – but Bangladesh tourists don’t spend that much.
Further the transition to hydrogen steel production, particularly through hydrogen recycling will have a devastating impact on that export. (Ore and Coal).
Ore,Coal, Tourism, Students – 1,2,3 and 4 top ranked exports gone in a matter of 24 months.
Whatcha got to replace that with ?
Barely being sold… Perhaps try harder and be fully sold?
Whatcha got to replace that with? Big mouth and bull, apparently.
On #4, hasn’t the value of student ‘exports’ been debunked on this blog a number of times as a total farce?
#2 I suspect if we tried a bit harder to lure/market other nationalities the hole could be plugged – once the borders are open which is probably 12 months away or more anyway. Northern hemisphere winter tourists from around the globe need to go somewhere to escape winter, and with the lower AUD we aren’t as expensive as 5 years ago.
I’m not smart enough to answer #1 and #2 though.
You could be right. But I’d say it’s the shock we have to have! Anyhow the bigger the shock now the more likely Australia will reform it’s corrupted rentier economy & the better we’ll be in the long run, so either way I’d take it.
China is winning this game.
The Australian government really is pathetic. The weasel Birmingham has probably quietly done a complete backflip on his position and that’s why he’s been trying to contact his CCP masters to grovel and apologise while they feign sook and ignore him. That’s why we haven’t heard any talk of an investigation for nearly a month now. Watch the Australian government backpedal and grovel.
This whole scenario is playing out exactly as China planned.
Likely Birmingham and the government will be making offerings such as foreign investment approvals and allowances behind the scenes to please the spoilt CCP toddler.
This.
Birmingham is toothless.
Barely is used in brewing, bread and as a feed crop.
Birmingham should be talking to Belgium, Germany, Russia, African nations (plague of locusts) Or even the Red Cross for food drops. Hell, Indonesia might even need it, they buy our cattle and then fatten them in feedlots and barely would be great for that
“Barely” export is barely worth a mention.
Barley, on the other hand…
lol, good catch
But maybe my Freudian slip is valid. Barley is Barely worth anything when there no market for it.
The barley going to Vietnam is then shipped to China with someone in Vietnam (and China) getting their cut.