Agsafe Weekly Rural Report

Agsafe Weekly Rural Report:

Finance: The US dollar has fluctuated across the week as markets struggle to understand Trump, however the NZ dollar finished the week at a similar level to the previous week. Brent Crude fell from around $73/barrel last week to under $65/barrel.
Wool: Wool prices The Government has decreed that government buildings should prefer woollen carpets – good start!!
Beef, Sheep & Venison schedules: Meat schedules are steady to slightly firmer across the board. There is strong demand for red meats especially the manufacturing beef in the USA. Venison prices are good, lamb & beef schedules are OK.
Dairy Prices. The g/DT this week will be a strong indicator of the effects of the tariffs imposed on China. Any drop in prices will hopefully be short-lived until the USA trade war is sorted.

Jim’s Weekly Rant:

It has been a very different few weeks with Donald Trump’s tariffs causing mass hysteria across the globe, but it seems as if the extreme measure may just be working exactly as Trump planned all along. But the real problem is that no one knows what his plan was other than to bring manufacturing back to the USA and Make America Great Again. Unfortunately, we only hear one narrative from our often pathetic left-wing NZ media who promote Trump’s Derangement Syndrome. It is useful to watch some other international news to get an alternative perspective. The European Union says they're ready to negotiate with the United States saying they've offered zero for zero tariffs. So the question is, “Is Trump plan to establish a world-wide free trade environment?” If that is the ultimate plan, perhaps it is working but in the medium-term many will get burnt and the collateral damage may be difficult to recover from. We don’t have to look far to see the effect it is having, and the NZ timber industry is a good example as log prices have fallen as China stops buying logs due to their now 145% tariff on all goods going into the USA. Much of the timber sold from NZ is manufactured into MDF and exported to the USA fitting out homes and offices. The MDF then attracts a 145% tariff. East Coast foresters will not be able to afford the harvesting costs and the slash removal costs, so harvesting of logs will grind to a halt. If the tariff war is about an international free trade environment the wage disparity will continue to make good cheaper to manufacture in places like China, India & Viet Nam. It will not lift these workers out of poverty or provide them with free medical care, but will place them at the mercy of the buyers in the USA and underpin their low wage economies. If it is about balancing the books from years of being, in Trumps words, “plundered economically” then it we can only wonder about a tit-for-tat game being played by a geriatric politician living in the past. There are always going to be trade imbalances as different nations produce and trade different goods using a nations resources and labour to supply components for the good of everyone. In the mean-time we will just have to sit and watch and wait for the announcement tomorrow that will again vary the tariff rates and Trumps vision of what will take-place. Eion Musk is even calling for a free trade pact with Europe while China receives the full wrath of Trump as they retaliate with punitive tariffs imposed on US goods going to China. At least Trump likes hamburgers and our manufacturing meat supply to the USA is as important for them as it is for us - we are told each American eats 3-hamburgers per week!! The chaos created has been widespread with international financial markets experiencing wild fluctuations, currency movements have been extreme and even oil prices have dropped dramatically. Trump has been inconsistent over the week with a change in his tariff rates dropping every country back to 10% except for China and if China has no money they wont be able to buy NZ foods or Australian coal which will seriously affect our economy. The g/DT this coming week will be an early indicator of the collateral damage and how one market might be affected.