In September last year I asked whether a 69% achievement of target under the U.S./China Phase One trade deal would be as good as it gets.

Well, the answer is a resounding, yes 💯!

When all was said and done, only around around 57% of the two year target was achieved - leaving a US$215 billion gap.

A not unexpected epic fail 🤦‍♀️🤷‍♂️

But in reality this was a ‘placeholder’ deal that realistically was never going to in a Trump’s ‘big and beautiful’ Phase Two deal, as I’ve written before.

While the U.S. belt never hit the Chinese road under Trump’s Phase One trade deal - the granular charts are revealing 👁‍🗨👁‍🗨 and show which covered goods China actually needed.

No guesses required - it was agriculture.

Over the two year period, more than three quarters of the Ag commitment was actually achieved.

Note that the actual performance was back-ended as expected, and while only 64% of target was achieved in 2020, a respectable 87% of China’s target was achieved in the final year.

As many of us had predicted back in 2020, there has still been no sign of a Phase Two trade deal.

Despite this, the likely situation is that China will have to buy more soy and agricultural product from the U.S. and elsewhere as it dries up in Russia and Ukraine as a result of the invasion.

More kero to the inflation fire 🔥🔥🔥

And missed harvesting and plantings (an entire season missed - yikes) means more unsated food demand from the world, particularly from Europe and China.

Aside from crops, China has a monumental problem with its 🐖🐖 industry with pork product unlikely to be revived to its former glory.

Also, with gas and fertiliser prices still mooning, the cost to grow and deliver food, nutrients, animal feed and bedding goes up as well.

It’s little wonder fertiliser, agricultural and connected supply chain products are still catching a massive bid, and this is likely to continue as global oil and gas imbalances as well as European supply chains fail, within an already stretched inelastic global supply chain.

Blessed with a massive land and natural resources endowment, we here in WA can sometime get blasé about how the other half live, and underestimate the social, fiscal and monetary support that will be required for years to come.

Stay strong 🔰

Mike