等待果陀? – Soybean Farmer Edition

(Translation: “Waiting for Godot”) Many observers have noted that the Chinese must eventually come to the US for some of their soybean needs, as the supply of Argentine and Brazilian soybeans are depleted and American soybeans are harvested. Current futures for November 2018 do not indicate a price recovery to pre-Trump tariff war levels, even if they do come. As of today:

Futures prices for November delivery remain far below where they were in March, about an 18% decline. Using historical correlations (Chinn and Coibion, 2014), this suggests that spot prices have taken a similar hit.

The Friday drop in prices is in part attributable to the USDA’s World Agricultural Supply and Demand Estimate (WASDE) release, which indicated better than expected harvests (this is an “event study” interpretation — see here).

The WASDE forecasts contains some interesting nuggets (page 15) which suggest a surprise in yield/acre. The end-of-marketing-year stock is projected to rise from 430 to 785 million bushels going from 2017/18 (ending this month) to 2018/19, instead of the July forecast of 580 million bushels (and 2017/18 itself showed an estimated increase from the previous year’s 302 million bushels. So, 302 to 430 to est. 785.

USDA apparently does not see a recovery trend in prices. Average price is $935 for the nearly ended market year, and is now forecasted to range from $7.65-$10.15 in 2018/19, down from the July range of $8.00-$10.50.

For context, one estimate of breakeven for an Indiana farm on high productivity soil is $10.05/bushel.

84 thoughts on “等待果陀? – Soybean Farmer Edition

  1. pgl

    The $10.05 per bushel breakeven price is well documented including this noted (in several places):

    ‘It is important to note that opportunity costs for unpaid family and operator labor, owned machinery, and owned land are included in tables 1 and 2.’

    I would advice CoRev to read this very carefully – many times. Of course as we have all seen – he really hates actual economics. So something tells me he will call this a commie concept or something like that.

    Reply
  2. 2slugbaits

    The expected yield per acre has increased over the sad July estimate. In June/July the concern was “dirty” fields because the weather did not allow for spraying.
    Also need to keep in mind that a lot of farmers sell to local coops rather than commercial grain elevators. So the price that a farmer is likely to get will be less, but then again some of the other production costs will be less as well. In Iowa 72% of soybeans are sold to coops rather than commercial grain elevators. Here are yesterday’s prices for interior elevators:

    US 1 Yellow Soybean Prices were mostly 42 cents lower for a state average of 7.77.

    Iowa Regions #2 Yellow Corn #1 Yellow Soybeans
    Range Avg Range Avg
    Northwest 3.11 – 3.31 3.20 7.51 – 7.78 7.73
    North Central 3.10 – 3.25 3.17 7.73 – 7.83 7.78
    Northeast 3.03 – 3.26 3.15 7.52 – 7.87 7.70
    Southwest 3.14 – 3.24 3.19 7.77 – 7.84 7.82
    South Central 3.12 – 3.26 3.17 7.80 – 7.87 7.84
    Southeast 3.04 – 3.24 3.15 7.70 – 7.83 7.77

    Corn basis to STATE AVERAGE PRICE for the CBOT SEP contract -.40
    Soybean basis to STATE AVERAGE PRICE for the CBOT SEP contract is -.74

    https://www.iowaagriculture.gov/agMarketing/dailyGrainPrices.asp

    Reply
  3. CoRev

    Menzie, “The Friday drop in prices is in part attributable to the USDA’s World Agricultural Supply and Demand Estimate (WASDE) release, which indicated better than expected harvests …” IIRC we had a similar price drop after the July WASDE where they also predicted an increase in yield.

    Pgl, “The $10.05 per bushel breakeven price is well documented including this noted (in several places):” Actually the 2016/17 average price received by farmers was $9.47/bu https://www.usda.gov/oce/commodity/wasde/wasde0718.txt I guess that means soybean farmers went out of business in 2017.

    2slugs, “Also need to keep in mind that a lot of farmers sell to local coops rather than commercial grain elevators. “, but we know that ~1/2 the crop was already contracted at the pre-tariff prices. I can guess few if any are being contracted at hat low price.

    Reply
    1. Menzie Chinn Post author

      CoRev: Yes, but note the revision in projections going from July to August WASDE; exports for 2018/19 down to 2040 from 2060 (while estimated exports for this MY is 2110). So part of downward revision in expected quantity exported drives price decline in futures.

      As for November 2018 futures, open interest is at 420,426 as of Friday close CME, accessed 8/11, 2:21PM Pacific. This future is the one that has the most open interest and volume of all the contracts.

      Reply
      1. CoRev

        Menzie, “So part of downward revision in expected quantity exported drives price decline in futures. ” Never doubted it, just pointed out the impact of yield estimates also has on prices.
        “This (November 2018) future is the one that has the most open interest and volume of all the contracts” Yup, this is typical for the 1st month after harvest peaks.

        I’m just not sure what your points were.

        Reply
        1. Menzie Chinn Post author

          CoRev: Yield/acre shouldn’t have an impact on export quantities. Yet estimates have been pushed down substantially suggesting Chinese tariffs will have an impact (i.e., US won’t just sell to other markets), as prices are pushed down.

          You seemed to indicate that farmers weren’t taking contracts at these lower prices. Yet the large amounts of volume now for November contracts suggests otherwise.

          Reply
          1. CoRev

            Menzie, oneof my very first questions to you in this series of soybean articles was: do you know you are talking about futures contracts? You are continuing to cite futures contract prices: “Futures prices for November delivery remain far below where they were in March…” Did you know that most futures contracts delivery is not actually exercised, but are traded out before their delivery date? Did you know that most futures traders are price speculators and never take delivery? The other large class of futures traders are hedgers, some of which may be farmers.

            So when you claim: “You seemed to indicate that farmers weren’t taking contracts at these lower prices. Yet the large amounts of volume now for November contracts suggests otherwise.” your volume cite probably has little to no indication of farmers are doing, especially in a down turned market. Unless you believe, as does 2slugs, that farmers are not rational. That is obviously not true because it is reported that ~1/2 the 2018 crop was already hedged at the higher pre-tariff prices.

    2. pgl

      Oh Lord – CoRev seems to think that the breakeven price is the same thing as the average of actual prices over the past two years.

      “Actually the 2016/17 average price received by farmers was $9.47/bu”

      Seriously CoRev? BTW – businesses often incur temporary economic losses without immediately shutting down.

      If you do not get this – you are truly hopeless. If you do get this – your latest rant was both pointless and dishonest!

      Reply
      1. CoRev

        Oh lord, pgl thinks a “break even” estimate price estimate is mare than a sample of how to create it!
        Seriously pgl? BTW – farms often operate above and below their estimated break even crop price. I guess you never heard of farm subsidies nor crop insurance.

        “If you do not get this – you are truly hopeless. If you do get this – your latest rant was both pointless and dishonest!” and another example of your ignorant lying.

        Reply
        1. 2slugbaits

          CoRev farms often operate above and below their estimated break even crop price. I guess you never heard of farm subsidies nor crop insurance.

          Crop insurance is supposed to cover idiosyncratic risk; it’s not supposed to be a planned subsidy. Unless of course you’re a welfare cheat. Tell us, are you a welfare cheat?

          price estimate is mare than a sample of how to create it!

          Speaking of price estimates, I see that you have avoided answering Menzie’s last question about your understanding of “rational expectations”:

          Suppose the Fed changes its operating procedure, and everybody knows the regime has changed. Will the market’s expectation of the Fed funds rate tomorrow necessarily equal the actually realized (ex post) Fed funds rate, up to some random error (a true innovation, in the technical sense), if agents use rational expectations?
          http://econbrowser.com/archives/2018/08/when-storage-does-not-save-one-from-low-commodity-prices#comment-215103

          If you’ll recall, this entire discussion about rational expectations versus adaptive expectations had to do with how farmers should go about estimating next year’s price in the aftermath of Trump World given that you believe soybean demand is inelastic and soybean supply is elastic because farmers have a lot of alternatives.

          Reply
          1. CoRev

            2slugs, I did answer mernzier’s question. Why do you think farmers are not rational in their planning and estimating? Could you please provide a real world example. The remainder of your comment is just more gibberish. Yes, I did understand what you said re: elasticity. Would you please find my comment citing these so that we might compare meanings, because I am pretty sure are translating my comment into your economics lexicon.

            Do I believe farmers have alternatives? Absolutely. Don’t you? You cited planting alternatives in your example, even though they were incomplete. Can you think of any current year alternatives assuming the average farmer already has a profit on ~1/2 his crop and a promised federal subsidy on the other 1/2? Or do you still believe the farmer to be irrational?

          2. Menzie Chinn Post author

            CoRev: I have used the comments search facility available to the managers of this website to see if you have answered my question, and I find no evidence that you have, using the CoRev handle. So Let me quote what I asked, and ask, for the love of God, please answer the question directly so we can dispell any notion that you don’t understand the concept of the rational expectations hypothesis, as used by economists (i.e., as used on this weblog). (I would think you’d want to dispell the notion you don’t understand, so this is in your self-interest, … as long as you understand…)

            CoRev: My students read the textbook, but don’t always understand what a given concept means. Let me see what your answer to this question is:

            Suppose the Fed changes its operating procedure, and everybody knows the regime has changed. Will the market’s expectation of the Fed funds rate tomorrow necessarily equal the actually realized (ex post) Fed funds rate, up to some random error (a true innovation, in the technical sense), if agents use rational expectations?

            It’s not a very abstruse question. I ask my undergraduate students this question in their midterms.

          3. pgl

            “2slugs, I did answer mernzier’s question. Why do you think farmers are not rational in their planning and estimating?” – CoRev. Got that? Some dude called mernzier asked CoRev a soft ball question.

            Now Menzie asked CoRev to provide us a definition of “rational expectations”. Of course he has not as he has no clue what this term means either.

          4. 2slugbaits

            CoRev I did answer mernzier’s question.

            You are lying. You did not answer his question. You told Menzie that you had looked up the definitions and found them to agree with what you thought they meant. Menzie wanted to doublecheck your understanding, so he asked you the same kind of simple question he would likely ask one of his students. You never answered that question.

            Why do you think farmers are not rational in their planning and estimating?

            I didn’t say farmers were not rational. I asked how farmers would project next year’s price. The way you phrased your question tells me that you still don’t understand the meaning of “rational expectations” and “adaptive expectations” within the econ literature.

            Yes, I did understand what you said re: elasticity.

            I didn’t ask you about elasticity. My comment was about the stability of price and output in a “cobweb” model scenario with a flatter demand curve relative to a steeper supply curve.

          5. pgl

            CoRev continues to bob and weave this question like he bobs and weaves everything else.

            And this troll dares to accuse our host of bobbing and weaving?!

        2. pgl

          You were the one who suggested prices being below the breakeven price would lead to immediate exit. Now you are directly contradicting what you earlier said. One day you might make up your mind where you are coming from but as usual it seems you are all over the map.

          Then again your total lack of knowledge of even basic economics requires you to parrot whatever the latest was said on Fox and Friends.

          Reply
          1. CoRev

            Pgl, please cite the comment where I said: “You were the one who suggested prices being below the breakeven price would lead to immediate exit.”

            BTW, please cite my earlier response to you so that I can again say: If you do not get this – you are truly hopeless. Hint: this = sarcasm.

      2. pgl

        “Menzie, oneof my very first questions to you in this series of soybean articles was: do you know you are talking about futures contracts?”

        CoRev is the gift that keeps on giving! Yes Menzie clearly knows what is talking about. After all – he has published on this topic.

        Of course CoRev has no clue what ANY of this means as he has never bothered to learn even the basics. And yet he babbles on and on and on in his usual incoherence!

        Reply
        1. CoRev

          Menzie, 2slugs, pgl, Why all the grasping at straws? My search results was: ” Rational Expectations Theory
          What is the ‘Rational Expectations Theory’? https://www.investopedia.com/terms/r/rationaltheoryofexpectations.asp

          The rational expectations theory is an economic concept whereby people make choices based on their rational outlook, available information and past experiences….” It was what I understood from 2slugs context, so looked no further.

          Menzie, “It’s not a very abstruse question. I ask my undergraduate students this question in their midterms.” Since I have not had the benefit of being a student and hearing your lecture and background to the question I will defer answering your midterm question. Without that experience your question appears incomplete at this point. Consider me risking a zero credit for the question to assure I answer all other questions then return to it once I complete the midterm.

          Pgl, babbling on about break even prices as if they were more than just estimates, then paraphrasing his misunderstanding of what I said does another runner when challenged to find the reference.

          Reply
          1. Menzie Chinn Post author

            CoRev: Seriously? Case in point of somebody who’s read something but doesn’t understand, particularly the empirical implications of the hypothesis. If you can’t — or won’t try to — comprehend, further interaction is futile. Consider this the final response to any comment you make.

          2. 2slugbaits

            CoRev Let me help out by trying to explain this in as intuitive a way as possible. My apologies to the rigorous purists in econ world, but I just want to give you the intuitive sense. Adaptive expectations describes behavior in which people look to some weighted average of recent experience. For example, if inflation has been running at 2% for the last couple years, then people will expect inflation to run at something like 2% next year, give or take some random deviation. But the key point is that it’s backward looking based on past experience and expectations are not updated in advance of new knowledge, just new experience. Notice that there’s nothing irrational about adaptive expectations, but it’s not “rational expectations” in the sense that economists use the term. Unlike adaptive expectations, which is “model free” and backward looking, rational expectations is forward looking and model based. Rational expectations tells us that people don’t just look at past history, but incorporate new publicly available information into some kind of model framework. For example, if the Fed announce that its new inflation target was 1% rather than 2%, this would be a “regime change.” That would tell rational actors that previous inflation history is no longer a good guide. Rational actors would then plug that new information into some kind of model framework such as the Taylor rule. The Taylor rule would tell actors that the lower inflation target implies that the Fed will want to increase the Federal Funds Rate, so just using the ex post FFR would not use all available information.

            Now why is this distinction important in the context of soybean prices? Remember that I said you were both implicitly and explicitly arguing that demand for US soybeans was relatively inelastic (“where else is China going to get its soybeans?”) and the supply curve was relatively elastic (“farmers have lots of alternatives to selling soybeans”). That old textbook chestnut known as the “cobweb model” tells us that inelastic demand curves and elastic supply curves along with adaptive expectations pricing means that markets diverge from an equilibrium position. It’s an explosive market. But the “cobweb model” does not hold if farmers follow a rational expectations approach to pricing next year’s crop. Great. We’re saved from the horrors of the “cobweb model” and we can all sleep safe in our beds. The problem is, if you’re a farmer in late winter thinking about what to plant, what rational expectations model can you appeal to that will guide you in Trump World with an arbitrary and incoherent tariff policy? I believe that in the absence of a workable rational expectations model framework, farmers in Trump World will be tempted to follow an adaptive expectations pricing model. And that means soybean markets will move away from a stable equilibrium. That’s kind of a problem.

          3. Anonymous

            2slugs, your latest explanation still does not diverge from what I understood was your point with the exception of the jargon. Refer to my i, and you will see we are saying similar if not the same thing. If you can not see that, then I fear you are not talking about farmers, rationality, and experiential vies of their world, but economists and unrelated views.

            I asked you questions re: what alternatives do you think farmers have for today’s and ‘s crops. Do you have any?

          4. 2slugbaits

            CoRev No, we’re not saying the same thing. To help you understand the difference go back to the discussion about futures markets being the best predictor of future spot prices. Why is that? Recall that you were the one who was making an adaptive expectations prediction. You maintained that prices would rebound and you based that claim on recent experience. OTOH, the high paid professional traders in the futures market make greater use of available information and crunch it through actual models; i.e., they follow a rational expectations approach.

            I asked you questions re: what alternatives do you think farmers have for today’s and ‘s crops. Do you have any?

            I’m not a farmer. My wife’s side of the family comes from a long line of Iowa farmers. In fact, she’ll be making her annual trip to the Iowa State Fair this week. My recommendation would be to find another line of work and next time vote Democratic.

          5. baffling

            corev, you did not answer the question about rational expectation theory. either you read it and realized you have misinterpreted the theory, or you were unable to comprehend what it states. this is why you presented a dodge in your response above.

            actually this has been a good exercise by menzie and 2slugs. over time, one tends to forget exactly what the rational expectation theory actually implies and what it is good for. forgive me if i am wrong, but the theory even allows for expectations which are incorrect in the end, as long as the model used for those expectations is consistent throughout (ie does not change midway)? this helps to eliminate uncertainty in the overall model outcomes. i think what corev is trying to explain is what may be termed rational choice theory, rather than rational expectations theory? it does not seem to require the same internal consistency in the decisions and resulting expectations. the use of the term “rational” in economics conveys an incorrect sentiment to those who view economics from the amateurs bench.

          1. CoRev

            Menzie, “CoRev: Seriously? Case in point of somebody who’s read something but doesn’t understand, particularly the empirical implications of the hypothesis. If you can’t — or won’t try to — comprehend, further interaction is futile. Consider this the final response to any comment you make.” It’s context, Menzie, soybeans versus Fed policy and market reactions, if you can not understand my answer, then OK.

            If not you then maybe 2slugs will explain the “empirical implications of the hypothesis.” associated with how farmers make their decisions. Do either of you believe they don’t make decisions: “based on their rational outlook, available information and past experiences.”

            Or pgl can discuss how the efficiency of the daily and even shorter futures market matches or correlates with the efficiency of the yearly cycle of farming

          2. pgl

            Even when exposed as the fraud you are – you continue with this gibberish? This is akin to Trump saying he is not a racist. Hey CoRev – when was the last time you talked to your mother? Something tells me that she is so embarrassed that she has disowned you.

          3. 2slugbaits

            CoRev If you’re genuinely serious about wanting to understand the empirical implications of the adaptive expectations versus rational expectations approach as applied to agriculture, see this rather well known paper:
            https://www.researchgate.net/profile/Matthew_Holt2/publication/254424905_Price_Risk_in_Supply_Equations_An_Application_of_Garch_Time-Series_Models_to_the_US_Broiler_Market/links/54d0f8670cf298d656695b3d/Price-Risk-in-Supply-Equations-An-Application-of-Garch-Time-Series-Models-to-the-US-Broiler-Market.pdf

            The study models risk (volatility) in the chicken broiler industry. Under adaptive expectations the supply response is much more sluggish under adaptive expectations than under rational expectations. Under rational expectations risk is model conditionally, whereas under adaptive expectations risk is unconditional. That’s kind of important if you’re in the livestock business….say hogs.

        1. Moses Herzog

          If you went back to that time era you might be surprised how many you saw dressed like that—and these were “traditional” country singers as well, Bakersfield was kind of considered a “break off” from Nashville and had some special qualities to it. But you would even see some “macho” guys in those duds. The current generation has women “music” performers inject 10 pounds of Jell-O brand gelatin into their butt and then let it hang out of the bottom of their shorts while the men stand off near the stage curtains and prostate themselves to them—–>> to each generation “their own”.

          I was mainly trying to razz pgi and CoRev, but I probably missed the bullseye as per usual.

          Reply
    3. 2slugbaits

      CoRev but we know that ~1/2 the crop was already contracted at the pre-tariff prices. I can guess few if any are being contracted at hat low price.

      So your theory is that more will be contracted at a higher price after harvest when supply increases?

      Reply
      1. pgl

        He will have to wait on answering your question what his new theory is. Wilbur Ross has yet to give CoRev the new marching orders.

        Reply
      2. CoRev

        2slugs, I’ve read the Garch Time Series Paper, and find it opaque to how a farmer would use it to estimate alternatives. It might have a possible for the futures market, but even that is unclear. So for hedging farmers it might have marginal use for if/when to accept a contract, but I find it unlikely that a farmer would not already know what and how a proposed tariff effects price Furthermore, could you explain the last sentence f the first paragraph of Conclusion. It seems they forgot a word in it. Your explanation of its importance in the livestock business also neglects any importance for the soybean farmer, the main subject of our many discussions.

        Regarding: “So your theory is that more will be contracted at a higher price after harvest when supply increases?” Where did you get that from? No, my theory is that prices will rise from today to be closer to last year’s price of $9.47 as we pass harvest. Of course, if the tariffs are lifted or even hinted at by that time prices should reach or even exceed last year’s average price paid to farmers.

        Also 2slugs, you have made claims about crop insurance that is just incorrect. One type of crop insurance is: “Revenue Protection Crop Insurance” https://www.extension.iastate.edu/agdm/crops/html/a1-54.html From one of your favorite states. There are also provision in the more common MPCI
        “Multiple Peril Crop Insurance (MPCI)

        MPCI policies must be purchased prior to planting and cover loss of crop yields from all types of natural causes including drought, excessive moisture, freeze and disease. Newer coverage options combine yield protection and price protection to guard farmers against potential loss in revenue, whether due to low yields or changes in market price.…”

        To conclude the use of these kinds of econometric models may be useful to economists, but probably have not deeply penetrated the farming community unless packaged as part of the commercial Farming Management S/W. I did a very quick review of this type of S/W and found this to be typical of the functions provided: https://agcinect.com/products/?utm_source=Capterra

        Reply
        1. pgl

          “To conclude the use of these kinds of econometric models may be useful to economists, but probably have not deeply penetrated the farming community unless packaged”

          Yep – economics will never penetrate your thick skull unless sanctioned by your political masters! Babble on!

          Reply
        2. 2slugbaits

          CoRev my theory is that prices will rise from today to be closer to last year’s price of $9.47 as we pass harvest.

          Whether you know it or not, this is an example of adaptive expectations, not rational expectations. That does not mean your $9.47 forecast is irrational, but it’s not a rational expectations forecast as understood in the econ literature.

          could you explain the last sentence f the first paragraph of Conclusion.

          Yes, a word is missing, but from the context it’s clear that the missing word should be something like “change.” In other words, the conditional variance derived from a GARCH process will change over time in response to changes in price. For our purposes the main thing you should get from the paper is that modeling risk as a time varying process is an example of a rational expectations approach and stands in contrast to simply modeling price using unconditional risk or modeling conditional risk via adaptive expectations.

          you have made claims about crop insurance that is just incorrect.

          No, I said that crop insurance was “supposed to cover idiosyncratic risk”. That was a normative statement. The crop insurance program you referenced does that, but it also does more than that. In fact, the expanded coverage is simply welfare for farmers. How else should we interpret this statement: “The premiums for all types of multiple-peril crop insurance are subsidized through the Federal Crop Insurance Corporation”?

          the use of these kinds of econometric models may be useful to economists, but probably have not deeply penetrated the farming community

          So now you’re saying that farmers don’t use a rational expectations approach, but instead use adaptive expectations in much the same way as you came up with your $9.47 price for next year’s beans?

          I suspect that most of the problem here has been your emotional reaction to the term “rational expectations” because you misunderstood that to mean that farmers who didn’t follow “rational expectations” were somehow behaving irrationally. Far from it. In fact, I suspect that many farmers do follow some rational expectations model and don’t just use some naïve adaptive expectations approach. Hey, the original motivation for the rational expectations hypothesis was all about the obvious inadequacy of the way adaptive expectations unrealistically modeled the way people respond to inflation. So I do think many farmers take a rational expectations approach…especially the large corporate farm operations that can buy econometric services. But the reason I brought all this up was to point out that it’s hard to see how farmers can apply any coherent rational expectations approach to soybean prices in Trump World because the policy regime changes with each tweet. The temptation will be that farmers revert to exactly the same adaptive expectations approach that resulted in your $9.47/bushel prediction.

          Reply
          1. CoRev

            2slugs, a normative statement? Why not just call it was it was your best GUESS? I call this snarky BS: “Crop insurance is supposed to cover idiosyncratic risk; it’s not supposed to be a planned subsidy. Unless of course you’re a welfare cheat. Tell us, are you a welfare cheat?” You accused me of lying because I never saw Menzie’s question. You just lied about your normative insurance comment being normative.

            You also lied about your meaning of rational irrational expectations and whether you referred to elasticities: “If you’ll recall, this entire discussion about rational expectations versus adaptive expectations had to do with how farmers should go about estimating next year’s price in the aftermath of Trump World given that you believe soybean demand is inelastic and soybean supply is elastic because farmers have a lot of alternatives.”

            If you notice”theory” was not attached to your statement, although when I did my research noticed it was a theory. I gave you where and what I used as definition. Did you have a problem with that? I do appreciate that you tried to clarify the meaning, but the misunderstanding was already established, and not worth my effort to chase yours and Menzie’s detailed meaning after finding a readily understandable definition which fit your example. Without the detailed training the difference between them is very muted as the both cite experience or past history, experience’s brother.

            If it’s not clear I have been trying to make a distinction from the limited economics-centered style of thinking and communicating compared with the much, much larger rest of the world. Economic theories for assisting farm management decision making MAY BE used, but it is not part of the regular OTC S/W available making it probably another example of wishful thinking. Farmers need to estimate the bottom line in a P&L statement.

            I previously mentioned the issue of use of jargon. This is a very good example of why it can be confusing. Making claims that this is an economics blog doesn’t help as many of the articles, and more of the commentary is political.

  4. Moses Herzog

    We need to get your Mom to translate either the real meaning or the colloquial meaning of this Menzie. GoogTrans says “Waiting on the fruit??” I assume this is literal but has some other semi-entertaining meaning. Tell your Mom you’ll get her some sticky rice with the banana leaf wrapped around it if she can answer this query from the dumb white ghost on your blog (all in good fun here, but sincere question).

    If this doesn’t work, tell her a very naive white guy who often visits your blog bought lots of cigarettes for his co-horts in China for the guanxi and he still hasn’t gotten back his rebate on those. No need to give internet id names, tell her he goes by “PeakTrader”, ok??

    Reply
    1. Menzie Chinn Post author

      Moses Herzog: Honest to goodness, I just googled “Waiting for Godot” in China, and looked for how it was translated. I did think it odd, that Godot=fruit, but that is translation. Every English word/name can be transliterated into Chinese, either in a becoming way, or unbecoming way…

      Reply
      1. Moses Herzog

        I felt amazingly dumb when I noticed after asking in my comment that you had put the translation up, in literally the first sentence. A moment you probably rarely have, where my face went flush and my right-hand palm went over my eyes. I am reading about Godot on Wiki now. Of course I have heard the title of the play before but did not know the story. I wager 99.9% your translation is quite accurate, though I suppose it must have played in Shanghai, Hong Kong, and Beijing before, so I guess that would be the “double check”, if they discuss the production on Weibo or Tencent or whatever.

        Reply
      2. Moses Herzog

        I bet the one with McKellen and Patrick Stewart is “a hoot”. Not much of a theater fan, but I might pay tickets to see those 2 as the main characters. Chinese actor Ge You could play a main character well in that also.

        This play (maybe not the title but the general dialogue) must translate well in Chinese. Here you will be thinking “Uh, thanks jackass, for verifying what I already know” but I did find one source (it’s the 3rd one down) that uses the exact same Chinese characters you do in reference to the play.
        https://www.linguee.com/english-chinese/translation/godot.html

        Loosely related here: What’s to say when China runs out of Brazil soybeans and Argentina soybeans they don’t just forgo it all together?? At least until the next harvest?? Frankly, when mainland Chinese perceive themselves as being “walked on” (which is probably how the Chinese Politburo is portraying this on Chinese state TV, making it “personal” so as to protect themselves over future consumer anger on food prices) they would walk over 50 yards of burning hot charcoal briquettes with a smile on their face, just to prove they were not “losing out to western imperialism”. So they’re going to go back to USA soybeans after they run out of Brazil soybeans???—–>> That’s not the mainland China psyche I was familiar with

        Reply
        1. Menzie Chinn Post author

          Moses Herzog: Saw the McKellen/Stewart version in NYC several years ago. Hilarious. The play was condemned in China for some time by the Party, so it must resonate with Chinese audiences. Re: soy – I am sure the Chinese government will try to minimize as much as possible reliance on US soybeans by (1) substituting out with corn, (2) importing more pork from non-US sources, and (3) import substitution by heavily subsidizing the planting of soy. On the other hand, the Chinese are pragmatic, and will probably go for some US soybeans now, while trying to support long-term development of alternative sources elsewhere, perhaps with subsidized loans.

          Reply
  5. Samuel

    I suppose we should add the $12 billion in aid to soybean farmers. Although, probably a drop in bucket to the individual soybean farmer after it gets divided among payments to farmers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs.

    Factbox: USDA’s $12 billion farmer relief package:
    https://www.reuters.com/article/us-usa-trade-farmers-factbox/factbox-usdas-12-billion-farmer-relief-package-idUSKBN1KF053

    By the way, …”in 2017, the federal government spent nearly $19 billion on agriculture support programs, and that total had been expected to rise to nearly $27 billion in 2018,”

    Reply
      1. pgl

        “Skeptics ask, for example, why it makes sense to offer assistance to farmers but not to other groups harmed by trade restrictions.”

        Ah but farmers tend to vote Republican so this makes perfect sense ala partisan politics.

        Reply
    1. pgl

      in 2017, the federal government spent nearly $19 billion on agriculture support programs, and that total had been expected to rise to nearly $27 billion in 2018

      As Kudlow would say = cutting government spending Reagan style!

      Reply
  6. Moses Herzog

    Off-topic
    I can’t find a recent post/thread that this paper’s topic fits into. And I am afraid if I wait for a post it actually fits into then I will forget about the paper. So, putting this up as it looks like a very good paper.
    https://www.stlouisfed.org/publications/regional-economist/second-quarter-2018/hispanics-contribution-human-capital

    When discussing the income and job paths, the topic connected to the hip is always education. This is worthy to keep in mind as many Republican legislators of different “red states” are choking off education funds, and creating dilapidated public grade schools across our nation. How long can you go down this path of choking off public school funds/resources and not see tangible negative results?? We are already there.

    We have had “Alex Jones types” in this nation since the snake oil salesman of the 1800s. But the question is what was the level of education of the person who bought the snake oil in the 1800s, and why do “Alex Jones types” capture the large following and “fanboy” base that they do?? Is the problem giving “Alex jones types” a platform when we will ALWAYS have “Alex Jones” types with us?? Or is the problem a poorly educated citizenry, that is more apt to digest and be captivated by “Alex Jones type” marketing/salesmanship/con-jobs?? Would it be wiser to focus on quality education, so a much smaller ratio of Americans consumed what Alex Jones was selling to begin with, and therefor, make a social media ban unnecessary?? You be the judge.

    Reply
      1. Moses Herzog

        There are some past American “characters” that fit the Alex Jones mold, but I am hard-pressed to think of them at the moment. If I ponder about it long enough 2-3 will come to me. When you watch him, (And I heard him years ago in the late ’90s when I drove semi) the first thought is “How much of this is an act, and how much of it is psychological issues??” I think 1) He’s a narcissist 2) He generally has low-respect for women. 3) He doesn’t love his wife (or any future wife he might have), but I do think he genuinely loves his son.

        One thing you have to remember—and consider in the equation—is Alex Jones lives in Austin—arguably the most politically liberal city in ALL of Texas. Why live in the most politically liberal city in Texas, if he’s eating from the same menu he gives his listeners?? Jones choosing to live in Austin strongly implies he knows the people he portrays on his show as his “nemesis” are the same people he breaks bread with on a daily basis. i.e Doesn’t do much for him in the “sincerity of message” department. i.e If you spend 3 hours per day on the radio railing against Muslims, you don’t go purchase a house in Makkah Saudi Arabia, right??——>>”probably” not.

        The “topically relevant” question in July-August 2018 is “Is Alex Jones a danger to American society??” There are many valid answers to this question, but only one that bears relevance from my personal vantage point—“Alex Jones is only as dangerous as an uneducated citizenry allows him to be”. Which, in 2018 America, qualifies as “mildly dangerous”—but no more or less dangerous than a Zuckerberg who knowingly takes Russian propaganda money for Facebook—and no more or less dangerous than a Tim Cook who smiles like a 10 year old fanboy as he shakes trump’s hand—-no more or less dangerous than either of those two men.

        Reply
  7. joseph

    In other tariff news, steel consumers have filed more than 20,000 requests for exemptions from tariffs. So far, only 1300 exemptions have been approved and almost 1000 of them, more than 70%, have gone to a single company in South Carolina that is — wait for it — owned by a Chinese company.

    Most of the steel exemptions have been blocked by objections filed by steel producer Nucor which — wait for it — financed a film called “Death by China” written and produced by Peter Navarro in 2011.

    Meanwhile, an exemption to the aluminum tariff has been requested by — wait for it — aluminum producer Alcoa which needs more raw aluminum from — wait for it — Canada.

    Other than just being an stupid idea economically, the tariffs are a golden opportunity for crony capitalism, graft and corruption.

    https://www.nytimes.com/2018/08/05/us/politics/nucor-us-steel-tariff-exemptions.html

    Reply
    1. pgl

      Quite the story starting with the title – “Steel Giants With Ties to Trump Officials Block Tariff Relief for Hundreds of Firms”.

      Drain the swamp so they can refill it with their own corruption!

      Reply
    2. pgl

      I reading Nucor’s 10-K and its complaints about foreign competition is a real hoot. So much China bashing so little time. Did they get PeakRacist to write this garbage including:

      “Efforts by foreign companies to evade duties by routing products through third-party countries is also a challenge. Artificially-priced imports and duty evasion schemes make it very difficult for Nucor to maintain sales prices and profit levels. As a result, Nucor joined three other steelmakers in filing a petition alleging China is circumventing coated steel sheet duties by shipping product through Vietnam. At the end of the year, U.S. steel producers also received a favorable ruling in this case when the U.S. Department of Commerce made a preliminary determination that corrosion-resistant and cold-rolled steel from Vietnam that originated in China evaded U.S. anti-dumping and anti-subsidy orders. A final determination is expected to be announced in the first quarter of 2018.”

      Whine, whine, whine!

      Reply
  8. Moses Herzog

    This is kind of interesting. I am not endorsing this guy. Obviously we have a lot of observation and reading to do before 2020. But my first impression of this guy is quite good. HIs wife is exceedingly attractive (roughly at the 1:22 mark in the video), which makes me intensely jealous and kind of semi-hate him (joke). But I may vote for him, if he comes across as honest and has a good platform, he’s in the voting picture for me.
    https://www.youtube.com/watch?v=GhArPPmHjCs

    Reply
  9. Moses Herzog

    I don’t know, but I think this guy Parker is a little looney. First of all, he’s going to have to have one HELL of a refrigerator. I mean, think about it, he can keep his hot food hot, but how is he going to keep his cold food cold?? And he can forget about ice cream on a hot summer day. And then there’s the problem in fitting a toilet into something the size of a car. I mean fine, Parker wants to touch the sun, but at least wait until the micro-toilet technology catches up. He’s not thinking this whole thing through.
    https://edition.cnn.com/2018/08/10/us/parker-solar-probe-launch-nasa/index.html

    OK, maybe I’m being too judgmental towards Parker. I mean, maybe the guy has never had cold noodles and vegetables in sesame sauce with a little ginger thrown in. A great dish he could enjoy during outdoor summer rock concerts. Still…….

    Reply
  10. Benlu

    https://m.huanqiu.com/r/MV8wXzEyNzAwMzY5XzEzOF8xNTM0MDQxMjQw

    (I used the translation app provided on the Chinese Web page)

    Guess next few months’ soya bean prices would be affected by pre-tariff stocking up.

    “On July 6 this year, in order to counter the US tariff of 25% on Chinese goods valued at 34 billion US dollars, China also announced the imposition of tariffs on US goods of the same size, and soybeans are on the list of such tax-added goods. In order to arrive at Dalian Port before the tariff was reached, the “Fei Ma Feng” had carried 70,000 tons of soybeans at sea and rushed all the way, causing world concern.

    The Guardian reported on August 8 that since the “Fei Ma Feng” failed to arrive in China before the tariff was imposed, it has been stranded at sea and sailed “out of destination” outside China. . However, according to the “Global Times” reporter on the 10th to prove to the owner, “Fei Ma Feng” actually has been parked near Beiliang Port, did not move, the owner said that the port was not because the port warehouse capacity is limited, waiting in line to enter the port discharge….. “

    Reply
        1. pgl

          Thanks for that! I sometimes need help translating Chinese into English. Now if you can translate that incessant babbling from CoRev for us!

          Reply
  11. joseph

    Moses: “But my first impression of this guy is quite good. HIs wife is exceedingly attractive (roughly at the 1:22 mark in the video), which makes me intensely jealous and kind of semi-hate him (joke).

    You know, you are sounding definitely creepy. And (joke) doesn’t make it better. You might just dial it back a bit.

    Reply
    1. pgl

      The point Yang was making there was how he loved his children. Did Moses even notice that? I’m sure his wife is a great mom!

      Hey Moses – come to Brooklyn as there are lots of very pretty single Asian ladies.

      Reply
    2. joseph

      You, know, I was trying to be polite but if you guys can’t take the hint, that kind of stuff is hostile and offensive in multiple ways. If you insist on acting like pubescent 12-year-olds why don’t you take if over to reddit.

      Reply
  12. pgl

    CoRevAugust 11, 2018 at 2:05 pm
    Pgl, “The $10.05 per bushel breakeven price is well documented including this noted (in several places):” Actually the 2016/17 average price received by farmers was $9.47/bu https://www.usda.gov/oce/commodity/wasde/wasde0718.txt I guess that means soybean farmers went out of business in 2017.

    CoRevAugust 12, 2018 at 10:37 am
    Pgl, please cite the comment where I said: “You were the one who suggested prices being below the breakeven price would lead to immediate exit.”

    Even though this has been asked and answered – expect CoRev find a way to weasel out of this one too! Like he answered Menzie’s question about the definition of rational expectations!

    Reply
    1. CoRev

      Pgl, why did you leave out the remainder of the comment? You really are clueless. You failed to recognized the sarcasm associated with your break even estimate and my sarcasm about your misunderstanding that it was anything more than just an estimate used in IIRC an example of how to do enterprise budgets for farms.

      Reply
      1. pgl

        sarcasm it is now? Good one since we all fall on the floor laughing at your incessant gibberish. That would be laughing AT you not WITH you.

        When you make up your mind WTF your economic thesis really is – get back to us!

        Reply
        1. CoRev

          Sarcasm it always was. Because it was aimed at you, you missed it. Obviously soybeans farmers are still farming after your claim they lost money on 2017 soybeans. It really is sad to have to explain such an obvious points, but it is expected considering to whom it was aimed.

          Reply
          1. pgl

            “It really is sad to have to explain such an obvious points”.

            This is from someone who has yet to master 2 + 2!

  13. pgl

    Today’s news was dominated with the burning question – who is more dishonest: Omarosa or Trump? Of course followers of this blog realize how trivial this question is as we all know the most dishonest babbling today came from our soap box star CoRev.

    I get this sense that no one cares about Omarosa anymore. Perfect time for CoRev to ask her out! These two should get along very well!

    Reply
    1. Moses Herzog

      I might tune to her TV appearances, depending on how Omarosa dresses. But I’m quite shallow that way. Don’t expect me to be running to the store for her book like I did Michael Wolff’s “Fire and Fury” though, which, if not for thinking the sales annoyed the hell out of Trump, I would mildly regret doing.

      What makes me kind of chuckle inside myself about Omarosa is the black community hates her more than probably even the most racist of whites (obviously there are legit reasons for non-racist whites to hate her too). 98% of the black community sees her for exactly what she is—an opportunist and the female version of an “Uncle Tom”
      https://www.youtube.com/watch?v=3yVVhlPPEyg

      The four black women in this Twitter photo literally have their backs turned to Omarosa, as she is speaking at a black journalists convention. How often would that happen to someone supposedly “representing” your group (which she was not and never has) as a member of a White House staff?? It is the ultimate disrespect, without “taking it up a notch” to the vulgar category.
      https://twitter.com/suzyscribe/status/896108830299377664

      Reply
  14. 2slugbaits

    Possibly some family relation to PeakTrader?
    https://www.msn.com/en-us/news/politics/gop-candidate-faked-college-degree-university-says/ar-BBLOvVr?ocid=spartandhp

    What’s with these GOP candidates faking college degrees? A few months ago I read a story of a GOP legislator who claimed to have a business degree. It turned out he had a management certificate from Hardees when he worked there as a teenager. Anyone remember “Dr.” Richard Allen, Reagan’s national security adviser? Turns out he didn’t actually have a PhD, but he still called himself Dr. Richard Allen.

    Reply
    1. Moses Herzog

      @ 2slugbaits
      If you went from 1985 up to now and counted them up, you’d have yourself quite the laundry list. Democrats get caught also but the transgressors on this issue are far heavier in the Republican ranks—and you see it with state level legislators as well. And the state level non-grads are much less apt to make the national news. In my state it’s very heavy, hardly a year will go by without at least 2 of these stories breaking, to the point I have emailed journalists telling them if they just went down the current congressional list and check-marked each one–you’d be certain to find yourself a story—which I doubt any of them check.

      I could go down the list–this guy is actually a graduate–but similar type deal—this guy was a “Bible thumper”, took pictures with rifles and supported the NRA, and had his name tacked on to every anti-drug bill on the docket. Until he got a little visit in a hotel room—where he was smoking dope with….. wait for it….. wait for it….. an underage boy,
      https://www.thelostogle.com/2017/03/14/ralph-shortey-likes-to-hang-out-in-motel-rooms-with-teenage-boys/

      https://www.thelostogle.com/2017/03/22/this-guy-paid-ralph-shortey-93000-to-be-a-campaign-consultant/

      Shortey was literally the poster boy of the Republican party in Oklahoma—and you could rarely go 2 weeks without seeing him “interviewed” on TV by some braindead blonde like Abigail Ogle. Of course our state’s best known toilet paper roll, “The Oklahoman” never caught this story—like all “breaking news” The Oklahoman gives us, the story either gets handed to them on a silver platter by the local police, or a state run agency tells them, and then they say “we broke the story about…..”, when they put it in the paper 16 hours after the state agency puts out a press release telling on themselves. To the point it makes you wonder if they are so “cozy” with Republican legislators they have known the story all along and were “sitting on it”. Similar to Trump and David Pecker’s “catch and kill”.

      On the positive side of the ledger for Shortey, as you can see in the photo, Shortey is very good friends with Donald Trump Junior. So he’s got that going from him. I call this photo “The Pedo and Trump Junior”
      https://goo.gl/images/p21n7S

      Reply
      1. Moses Herzog

        I take it back—Shortey went to an unaccredited college—so in my book that doesn’t count. But he didn’t lie about that part of his resume, as far as I know. People in the South tend to give you a “pass” if you went to some hole in the wall Bible school, so take it for whatever it’s worth. The Bible study is fine, but I have ZERO respect for these type schools.

        Reply
    1. Moses Herzog

      I didn’t even soy that one coming.

      That pun was soy bad, even I wouldn’t tell it.

      Anyone know if there’s a EU tariff on guacamole?? I’ve been waiting to use “This is Guacward!!!” for a long time now.

      Reply

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