757-242-3566 Thursday, December 8, 2016  
Weather |  Futures |  Futures Markets |  Market News |  Headline News |  DTN Ag Headlines |  AgBizDir.com |  Portfolio |  Charts |  Options |  Farm Life 
 About Us
 Useful Resources
 Precision Ginning
 Real Time Quotes
 USDA Reports
 Contact Us
 Admin Login
 Cotton Budget
- DTN Headline News
Eyes on Economic Trends
Tuesday, December 6, 2016 8:15AM CST

By Chris Clayton
DTN Ag Policy Editor

CHICAGO (DTN) --- As the U.S. sees its own economy improving and transitions to a new presidency, farmers will want to keep watching the economic situation in China and the impact that a slow down in China's growth could have on demand for feedstuffs.

Tom Scott, CEO of Informa Economics, spoke Monday at the DTN/The Progressive Farmer Ag Summit in Chicago about overall economic trends in the U.S. and some concerns over the horizon with China as a major trading partner for agriculture.

While recovery in the U.S. economy has been slow and steady, the country is projected to end the year with an average overall 1.6% growth in gross domestic product, but also forecast to see GDP grow 2.7% in 2017. "Right now, the trajectory of the U.S. economy is fairly positive," Scott said.

Scott took a look at some proposals by President-elect Donald Trump for the economy. Trump's tax-cut plan, for instance, could translate to adding $6 trillion to the budget deficit over the next 10 years. Scott noted the U.S. is eventually going to have to come back around and address its deficit issues.

Yet Scott also pointed to Trump's push to pump more investment into U.S. infrastructure. Trump has even mentioned infrastructure issues such as port dredging to spur more trade, which Scott highlighted.

"There's potentially going to be an explosion in infrastructure," Scott said.

Yet, Trump has also now put the Trans-Pacific Partnership on life support, and Scott said that is a concern as China moves to advance its own regional trade agreement in Asia.

Scott noted U.S. agriculture right now has a supply problem that needs to be worked through. From a demand standpoint, Scott said the U.S. should start shifting to other growing areas of the world such as sub-Saharan Africa, Egypt and India.

Still, for agricultural trade, the slowdown of the Chinese economy is a concern. It is not unexpected because China's rate of economic growth was unsustainable. The question becomes whether China's economy will have a hard or soft landing before its economic growth settles in.

"Be prepared for bumps along the way that impact agriculture," Scott said.

When it comes to bubbles in the China economy, economists have been watching the country's real-estate market. There is a lot of concern that China's real-estate industry is loaded with speculative construction and sales that could come crashing down, a situation that could be similar to the U.S. housing crisis eight years ago.

Outside the real-estate bubble, China has been implementing some policies to slow the movement of money out of the country. Early in 2016, there was an explosion of Chinese companies buying foreign businesses such as ChemChina offering $43 billion for Syngenta. Chinese officials are now clamping down on that buying spree.

Just over the weekend, China's concern over "capital flight" led policymakers to restrict the flow of money by multi-national companies. Firms had been able to move out $50 million at a time pretty easily, but the policy change could dial that down to just $5 million at a time. "So they are getting worried about capital outflows and they are getting very worried about not being able to control the value of their currency," Scott said.

Under the theme of "Farm Strong," the 10th annual DTN/The Progressive Farmer Ag Summit continues through Wednesday in Chicago.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Monday, December 5, 2016 11:28AM CST
Monday, November 28, 2016 11:01AM CST
Wednesday, November 23, 2016 11:18AM CST
Technically Speaking
Darin Newsom
DTN Senior Analyst
Saturday, December 3, 2016 9:24AM CST
Thursday, December 1, 2016 5:08AM CST
Thursday, December 1, 2016 5:06AM CST
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Wednesday, December 7, 2016 10:45AM CST
Thursday, December 1, 2016 10:13AM CST
Wednesday, November 30, 2016 11:08AM CST
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Wednesday, December 7, 2016 12:59PM CST
Tuesday, December 6, 2016 1:55PM CST
Friday, December 2, 2016 1:51PM CST
Minding Ag's Business
Marcia Taylor
DTN Executive Editor
Friday, December 2, 2016 3:36PM CST
Tuesday, November 8, 2016 9:38AM CST
Thursday, November 3, 2016 3:13PM CST
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Wednesday, December 7, 2016 11:20AM CST
Thursday, December 1, 2016 2:10PM CST
Wednesday, November 30, 2016 2:11PM CST
Tuesday, December 6, 2016 1:33PM CST
Thursday, December 1, 2016 3:56PM CST
Thursday, December 1, 2016 1:21PM CST
DTN Production Blog
Pam Smith
Crops Technology Editor
Tuesday, December 6, 2016 5:19PM CST
Friday, November 4, 2016 10:59AM CST
Friday, October 14, 2016 3:27PM CST
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Friday, December 2, 2016 3:33PM CST
Wednesday, November 23, 2016 1:10PM CST
Monday, November 21, 2016 11:21AM CST
South America Calling
Alastair Stewart
South America Correspondent
Thursday, December 8, 2016 6:48AM CST
Monday, November 14, 2016 3:53PM CST
Monday, November 7, 2016 1:16PM CST
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Thursday, December 8, 2016 9:04AM CST
Thursday, December 1, 2016 11:05AM CST
Monday, November 21, 2016 6:18PM CST
Machinery Chatter
Jim Patrico
Progressive Farmer Senior Editor
Wednesday, November 30, 2016 4:20PM CST
Monday, November 21, 2016 12:21PM CST
Wednesday, November 16, 2016 5:06PM CST
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Tuesday, December 6, 2016 2:06PM CST
Friday, December 2, 2016 2:18PM CST
Thursday, December 1, 2016 4:18PM CST
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Monday, November 21, 2016 4:29PM CST
Tuesday, November 8, 2016 9:46AM CST
Monday, October 3, 2016 4:25PM CST
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN