Farmers RAGE At Trump Argentina Bailout BETRAYAL

So, last week, the Treasury Department announced a $20 billion bailout of the chainsaw-wielding Argentinian libertarian president, Javier Millet, which actually turned out to be a backdoor bailout of American hedge funds and China. Meanwhile, it is driving soybean farmers in the United States absolutely mad. Let's roll JD Shulton, a lawmaker from Iowa, talking about the effect of this trade war on

soybean farmers in Iowa. Trump's illegal terrorists have single-handedly destroyed the US soybean market. As of yesterday, the price of soybeans is about nine dollars and thirty-four cents here in Iowa. The cost of production is anywhere from eleven dollars to $11.50. So per bushel of soybeans, it's about a $2 loss. And when you add the fact that it's about 50 bushels in an acre of soybeans here, you can do the math to see how bad things

are. Historically, 60% of Iowa soybeans have gone to China. With Trump's trade wars from his first administration, the US has become an unreliable supplier. So instead of these soybeans going to China, it's soybeans from South America, like places like Brazil and Argentina. That leads to more grains going to be left in the bin, which leads to oversupply, which means to lower prices.

So here's what we need to do. We need to demand trade, not aid. Farmers don't want to lower prices. So here's what we need to do. We need to demand trade, not aid. Farmers don't want to bail out, they want markets. The second thing we need to do is push for competition, both on the market side and especially on the input side with seed and fertilizer costs.

All right, so that's J.D. Scholten, Iowa Democratic lawmaker, who's actually a former minor league pitcher. Really? Yeah. And he's a big antitrust Guy, but you don't have to take it from the populist left Chuck Grassley if you want to call him a populist. I don't know Iowa senator Had one of his classic no punctuation random caps tweets where he says

Farmers very upset about Argentina selling soybeans to China right after USA bailout. Still zero USA soybeans sold to China. Meanwhile, China is still hitting USA with 20% retaliatory tariff. Need China trade deal now. Farmers need markets to boost farm economy. He still uses number two,

because he doesn't know that you can actually just tweet past the one, probably didn't know about the 140 character limit. So basically, what's going on is that, as JD Shultz said there, China buys more than half of Iowa's soybeans every year.

In 2017 and 18, Trump started a trade war with China, and China retaliated by, at the time, building relationships with a bunch of Brazilian soy farmers. What they also did is they started investing in Brazil because Brazil didn't have the infrastructure and the export technology and the on-site storage to really meet Chinese demand. They don't have the economic base to do it on their

own. So China was like, oh, the United States is gonna play games? Well, why don't we invest in Brazil and make it so that they are a more stable partner? So now, Brazilian soybean production since 2018, when Trump first started his trade war with China, has almost doubled. So Brazil now can feed China a lot more effectively than they could nearly 10 years ago when Trump

started this. Argentina is the other big player.

Which by the way, that is a preview of what could potentially come ten years after this current trade war on different issues not even just soybean.

Exactly yes we think that with this trade war that we're positioning America for this Renaissance. In fact we're just encouraging other countries to figure

out ways of existing without us.

Which is I, there are circumstances where that may be fine, but in this case.

You're a soybean farmer.

You're a soybean farmer, right, exactly. And I think, Grant, it speaks to the level of strategy that's actually at play as opposed to just like slapping crazy numbers out there, or on different countries, slapping these numbers on there.

But like there was obviously not a lot of thought about what was happening with Argentina and soybeans when the bailout happened. It was hedge fund guys are freaking out and we like Millet. It wasn't, what are they going to turn around and do with soybeans in China? And I think that's actually an important insight into the process.

Yeah, yeah, exactly. And in a moment, we'll be joined by Joe Voslevic from the Grain Markets and Other Stuff podcast, which I love that they describe themselves as the biggest grain market podcast in the world on planet Earth. Love it. Gotta love that. So they'll talk to us about what the effects have been on the grain market.

But yes, the hedge funds and and Scott Besant, former hedge fund guy, are you ever a former hedge fund guy?

It's like CIA.

Exactly. American hedge funds, when Millet was elected, were like, oh, this is great. We're going long on Argentina. Because Millet is going to do the thing we love. He's going to brutalize the unions and the poor

and cut the government spending. And as a result, foreign capital is going to flow into Argentina and the economy is going to grow. So they put all their chips in on Argentina doing great. Instead, what everybody else predicted is what happened. The economy further deteriorated and fell apart. And so now these hedge funds were looking at huge losses on their stupid bets.

Turns out they were smart because they got the economics wrong, but they got the politics right. And Bessant is coming in and bailing out all of these hedge funds. Now, at the same time that Argentina is getting this $20 billion bailout, they announce that they are cutting their export tariffs for soybeans, which slashes the cost of soybeans.

And China instantly buys enormous amounts of Argentinian soybeans. But don't take it from me, because who wants to believe me? So, Agriculture Secretary, Brooke Rollins, Trump's Ag Secretary,

texts Scott Besant, and somebody named JG. And we know this because a photographer...

Jamison Greer.

I think it's Jeffrey Goldberg.

He is in the chats.

He's still getting in the chats.

Probably USTR.

Probably Jamison Greer, the US trade representative. That would make a lot of sense. But making sense is not always what drives these things. So let's just pretend it's Jeffrey Goldberg. I actually texted Jeffrey Goldberg yesterday. I was like, look, you're still in these chats.

He did not respond, so maybe he is. So anyway, she texts Scott Besant and JG, which we assume is Greer. And so she writes, and also, so this is Besant getting lit up in the meeting and letting somebody photograph him. An Associated Press photographer got a snap of his phone. So the text says, I'm getting more intel, this is Brooke to Besant and JG, I'm getting more intel but this is highly unfortunate. We bailed out Argentina yesterday, parentheses Besant.

Besant, yeah. To him. So that James and Gre yesterday, parentheses Besant, so just to him, so that James Greer doesn't catch any or Jeffrey Goldberg doesn't catch any strays in this text message chain. And in return, the Argentines removed their export tariffs on grains, reducing their price and sold a bunch of soybeans to China at a time when we would normally be selling to China. Soy prices dropping further because of it. This gives China more leverage on us.

On a plane, but Scott, I can call you when I land.

Did nobody think about this? It's a rhetorical question.

No, clearly nobody thought, because they don't care. The hedge fund guys were looking at losses. And Millet, and Besant said in his public statement when he made the bailout that the reason he was doing it is that Millet has an upcoming important election and he wants Millet to win the election because then that will bring

more investment into Argentina. So he is out loud saying that the United States is using American taxpayer money to intervene in Argentina's election.

He's saying it out loud. And to undermine then American soybean farmers. We have a lot of different, I have a lot of questions for our guests about Matt Stoller's analysis of this and what the Trump administration is doing to help like maybe assuage concerns of farmers

and people in the ag industry overall. But that is, the text message is such a great insight into the illusion

of grand strategy. Yeah. Right. And again geopolitically... What'd you call it? Very unfortunate. Highly unfortunate. The geopolitically... We did it. It's not like a flood. Right.

Argentina is, from the Trump administration's perspective, geopolitically a very important ally when you have Venezuela, when you have Colombia, and what are perceived of like anti-American administrations, especially like as we've covered before, the pink wave taking over some of those countries, they want to keep Argentina happy, obviously, because they want to have that, what would we even call it, like a bastion of pro-American allyship in a big country in the middle of South America. So geopolitically, you see where they're coming from, like why they're doing what they're

doing, but obviously, they didn't even, Argentina would take the bailout if the condition was soybean. Like, if the condition was not selling, was not undercutting American supply. You can't screw us. Yes, they would take the bailout if the condition was soybean. Like if the condition was not selling, was not undercutting American.

You can't screw us.

Yes, they would take the bailout.

We didn't even think to ask them not to screw us because we don't care. But also, can you imagine if Democrats had this type of solidarity instead of viciousness towards South and Central America? If Biden had offered a $20 billion line of credit to, instead of sanctioning Nicaragua,

Venezuela, and Cuba, you would not have had the migration crisis. Like Biden drove the migration crisis with his policies towards Central America, Venezuela, and Cuba, which then helped bring Trump back to power. If they had done something like this instead, people would still be in their homes and in their neighborhoods in Cuba and Venezuela and Nicaragua and elsewhere. Anyway, so let's bring in Joe from the Grain Market

podcast and get some details on how this is playing out. Joining us now is Joe Vaklovic from the Grain Markets and Other Stuff podcast. Joe reached out yesterday saying he'd seen some of my coverage, I guess on TikTok or whatever. I don't think we had covered it here yet.

Offered to provide some of his expertise, because this is really your area. So Joe, thanks so much for being here. Really appreciate it.

Yeah, I'm happy to be here. I'm a big fan of the show. I've been watching Breaking Point since the very beginning.

I love it, love it. So I don't know if you were able to see the beginning of the show, but you've seen my shtick on this already. Tell us, what is the effect of Trump's trade war generally so far on, and we'll start at that high level, on the American soybean market?

If we wanna do high level, I'd like to backtrack a little bit just to give you kind of an overview of what's going on. The US farm economy, as it relates to our big cash crops, corn and soybeans, and the farmers that grow those crops, we are in now what I would argue is the third year

of a farm economy recession. A lot of this goes back to COVID and the inflation that occurred in the post-COVID environment. So we know that everything on the planet repriced in the years following COVID, right? We know that to be true.

The government numbers, CPI, would all indicate that that is true. The very same thing has happened to farm inputs, the things that farmers have to buy to grow their crops, whether it's seed, fertilizer, machinery, all of those things are up.

Corn production costs jumped 26% from 2021 to 2022. So we're in the backdrop here of this big inflation event. A lot of that is just generalized inflation. A lot of it's because the government threw billions and billions of dollars at farmers during and following COVID.

So you've got all that.

And it's a low margin business, right? If you're a corn farmer.

It's historically always a low margin business, highly cyclical. You go through years where you're break even to negative in terms of profit margins, and then you go through a couple of boom years. We had a couple of boom years. We had a couple of boom years, 2021 and 2022 were really good. Remember, we've been through this trade war thing before. And the last go around was rough, 18, 19 were rough.

China signs the phase one trade deal in 2020. And they did, as a matter of fact, come in and they bought a whole bunch of US corn and a whole bunch of US soybeans in late 2020 into 21 and into 22. And everything that happened in 2022 was crazy. We had Russia, Ukraine, big commodity price blow up, and everything just fell apart after that, mainly because we just,

we had big production. We had good weather in the US, we had good weather in Brazil, and these markets, the commodity markets that we deal with, they're generally speaking, they're weather derivatives. If the weather's good, the prices go down. If the weather's bad, the prices go up. So that's the backdrop. The trade war with China is icing on the cake here in terms of the farm economy and how bad it is and how much money farmers are gonna lose.

Last year, China accounted for 19% of all demand for soybeans grown in the United States. About 55% of it are beans that we crush domestically. There's about 40-ish percent that's exports. And of that 40-ish percent, China's, you know, roughly half of it, basically.

Pardon my math if it's not perfect, but China's a big soybean buyer, or was. Now we're into a new marketing year. Farmers in the US have begun soybean harvest. China has not bought a single bushel of US soybeans for current marketing your delivery. And therein lies the problem.

Now talk to us about how significant what happened with Argentina in the last couple of days is for soybean. I mean, everyone on the surface looks at that and is like, this is insane. This bailout is insane.

What Argentina does is insane. But how significant is it from the perspective of soybean farmers?

Optically, it's an absolute disaster for the Trump administration. It looks very, very, very bad. So the $20 billion in question, it hasn't happened yet. And it's supposed to be a swap line, meaning that we're gonna give Argentina $20 billion.

They're gonna give us 20 billion in pesos. We assume a whole bunch of currency risk, but we get political influence in Argentina, right? So as this was happening, these were all like simultaneous events, Argentina dropped its export tax on soybeans and corn and China came in and bought a whole bunch of like 40 cargos

of soybeans out of Argentina during that tax holiday. It just, it looks very bad optically, fundamentally, it's a couple million metric tons of business that in all likelihood would have gone to the United States almost certainly this time of year. The time of year that we ship the most soybeans out of the United States is immediately post-harvest. Call it October 1st through maybe mid-January, and after that, the Brazilian crop comes online, China buys from them.

It's a very bad look optically, and it doesn't help in terms of dollars and cents either.

Yeah, and you and I were talking briefly about this last night, and that really struck me. So it's because of the cycles of harvest, Brazil and US, different hemispheres, so different harvest cycles. And so typically the fall,

we'd be moving our soybeans to China. So if China can make it through the fall into the winter when Brazil really fully comes online, they might be able to wait us out the whole time and buy nothing. Is that possible? Like, is there enough, are there enough soybeans in the world for them to buy elsewhere through the fall?

Yes, there are. What could happen, though, is China prefers to keep healthy stocks of soybeans on hand. They don't want to draw down their stocks. Brazilian supplies this time of year kind of become exhausted. They're already through their big shipping window. China's bought a little bit from Argentina.

This is a debate in the grain industry right now. Can China actually make it to the Brazilian harvest without any US soybeans? And if so, what's the impact? Are they gonna draw down stocks? Are they going to risk drawing down stocks?

We don't know. At this point, I think it's safe to say that if China does buy US soybeans, it's gonna be in a reduced manner. You gotta keep this in mind. China is avoiding U.S. soybeans as its way of fighting the trade war. China's imposing the tariffs on its own soybean buyers, right?

So if China wants to waive the tariffs and say, we're going to buy U.S. soybeans, U.S. soybeans are cheap right now, just so we're clear, they're competitive. They can do it. They just don't want to because this is one of the few bullets that they have to fight

the trade war with the U.S. Now, Matt Stoller wrote on Sunday, he says there's another set of announcements in which quote, Trump sought to mollify his frustrated farmer base. Trump said he wants to use tariff revenue to bail out farmers. Stoller says it's possible, but could require Democrats in Congress to go along. Trump is also bragging about new international trade deals, though China is conspicuously absent and he is trying to bring down interest rates, which will help farmers. Also, another announcement was that

the Secretary of Agriculture, Brooke Rawlins, and Antitrust Chief, Gail Slater, announced they would be looking at the rising cost of crop inputs, like seeds, chemicals, fertilizers, and machinery. So there's three different things there, really.

What do you make of that kind of slate of potential Trump administration actions to try to mollify, Stoller says, farmers.

There is almost certainly going to be some sort of farmer bailout. There was last time around. It was called MFP, the Market Facilitation Program. And because of the trade war that occurred in 2018 and 2019, the previous Trump administration sent farmers tens of billions of dollars as its way of making up for the lost sales via the trade war.

In all likelihood, they're gonna do the same thing. Something's probably gonna be announced here in the coming weeks. And to be clear about what this does and who likes it and who doesn't, a lot of farmers are not a fan of this.

To go back to what I mentioned earlier, these payments that go out directly to farmers have directly influenced the inflation factors that I talked about earlier. High fertilizer prices, high seed prices, high machinery prices. A lot of studies have shown that the vast majority

of these direct farm payments don't really end up in the pockets of farmers. The farmers are essentially a mechanism by which these payments flow through back to the fertilizer companies and the seed dealers and the machinery companies and the seed dealers and the machinery

companies and the banks. Which are big corporations, right? Big corporations. And these are the corporations that lobby for the farm payments. It's not necessarily the farmers that are lobbying for the farm payments or the farm groups. It's the people who want their money back or want to continue to be paid or continue to make money. That's a huge, huge part of it that I don't think that the public understands, is that so much of this money is just, it's flow-through money. The farmers' mechanism so that the big banks get their money back, the seed dealers, the

fertilizer, they want their money back, they want to keep their stock prices high. That's a huge piece of this.

Yeah, God forbid any of our companies suffer any penalty. Any penalty, so if China does successfully stiff arm us Where else can the US sell soybeans like who out there in the world is hungry enough for this amount of? soybean harvest

Nobody in terms of soybean importers China is head and shoulders above any other global importer that being said we have had other global buyers step up and Export sales to this point for this marketing year, which just began a month ago to non China destinations are elevated But they're just I don't think there's a scenario in which not non China destinations make up the entirety of what? China won't buy put it that way Yeah, I could I can imagine Trump, you, you better buy up a bunch of our soybeans.

Ghana's like, what am I?

Yeah, nobody else has the appetite. I mean, China's just a huge country.

Yes.

What about India?

I mean, they got a lot of people.

They want some soybeans? I don't think so. We may sell some corn or some ethanol to India. They're in the midst of a big ethanol push. I just, I don't know. I don't know exactly what the quantities are gonna be.

As with all these trade deals, you know, I kind of go back to the phase one trade deal that was signed in 2020. It's like the trade deals are almost like ceremonial in some way, shape or form. And really what happens is the trade deal gets signed.

Does it mean anything when it's signed? I mean, publicly or optically, yeah, it does. But in terms of our markets are concerned, the market, the soybean market, soybean traders, the guys trading soybeans with big money, they're not gonna care

till we actually see the export sales. In the case of the phase one trade deal was signed, I believe on January 15th of 2020. It wasn't until six or seven months later that China came in and began to buy US products aggressively. And they did, but it took a long time. So I think that with these trade deals,

like we saw the one with Taiwan announced a week and a half ago. I mean, whatever, it's good press, but until they come in and start doing the business and we see an acceleration in the actual stuff that's being announced by USDA, which is now shut down, by the way.

But that's what we need to see.

All right, so anyway, if you're watching this program and you need a few billion tons of soybeans, America's selling. We are. Joe Vaklovic with the Grain Markets and Other Stuff podcast. Really appreciate the insight here.

Thank you. Thanks, guys.

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