By: Rob Wertheimer
China’s cancellation of soybean orders and the continued risk of similar actions poses a modest threat to NA farm equipment manufacturers. That’s not because someone else will grow more beans instead. The US and Brazil are too large in the global market for any major shifts in supply to happen quickly. Even so, a confidence hiccup could hurt US farm equipment sales; farmers are over levered financially and have too much equipment to boot. Longer term, US negotiators need to be wary of triggering infrastructure spend by China to lower the cost from other providers like Brazil, or opening up acreage in Russia.