Trump's Trade War: Used Cooking Oil vs. Soybeans and Crypto Crash

China's Trade War Tactics

• 🇨🇳 China is strategically avoiding US soybeans, despite lower prices compared to Brazilian soybeans, as a retaliatory measure against Trump's trade policies.
• 💡 This move is seen as economically irrational for Chinese traders but serves as a political statement to counter Trump's trade war.
• 📉 Chinese soybean purchases from the US have significantly decreased, impacting US farmers who are facing lower prices.

Used Cooking Oil (UCO) as a Trade Flashpoint

• 🛢️ Used cooking oil (UCO) is a primary feedstock for biofuels, a sector that has grown in the US, partly due to green incentives.
• ⚠️ Trump's threat to cut off US imports of Chinese UCO is aimed at countering China's refusal to buy US soybeans.
• 📊 The direct impact of a UCO ban is expected to be limited, as China has already reduced exports to the US and redirected some to the EU and domestic sustainable aviation fuel producers.

Impact on Farmers and Markets

• 🌾 US farmers are currently facing low prices for corn and soybeans, with production costs exceeding market prices, leading to financial hardship.
• 📈 Soybean oil futures saw a temporary increase following Trump's threat, while palm oil and other vegetable oil markets experienced some pressure.
• 📈 Shares of major oilseed processors like Bunge Global SA saw gains, anticipating benefits from potential disruptions in UCO imports.

Cryptocurrency Market Downturn

• 📉 Bitcoin has been sliding, following a significant crash over the weekend, with concerns about a reverse wealth effect potentially contributing to a US recession.
• ⚠️ There is a massive excess supply in cryptocurrencies, with 25 million different cryptocurrencies existing compared to a limited supply of precious metals.
• ⚖️ The ratio of gold ounces per bitcoin has decreased significantly, suggesting that cryptocurrencies could continue to fall in value relative to gold.