Biden Meets World Leaders, Plans Cooperation
President Biden made his first foray into foreign trade by meeting virtually with Canadian Prime Minister Trudeau last week. Our northern neighbor is one of our biggest trade partners. Most of their exports come to the U.S., as we’re a wealthy, hungry, and ready buyer. We have a large, dense population. In contrast, they have more uninhabited land and are less needy of raw material, but like to import the finished products we manufacture. We buy their oats, wheat, canola, hogs, gold, silver, copper, lumber, and heavy crude; they buy our vehicles, computers, furniture, machinery, and tools.
Though the pandemic and climate change have so far dominated their conversations, it won’t be long until they turn to trade issues, try to mend intense indigenous rights issues, the Keystone XL pipeline controversies, and tariffs on lumber.
The trade imbalance is further accentuated by their smaller population, as it requires less deficit spending on infrastructure, health care, housing, and finished foods allowing their federal debt to be relatively low. The Loonie is often chosen as an investment or safe-haven currency by those who fear our national debt, now exceeding $27 trillion. Canadian currency rose sharply during and shortly after the leaders’ conversation but took a massive crash on Friday along with the Aussie dollar, the other commodity currency.
On Thursday, Biden met with Saudi Arabia’s King Salman, another major commodity-exporting country leader. Until recently, the Saudis provided more crude oil to the world than any other nation. Russia and now the U.S. have become competitors for providing the world with oil. Biden and Salman’s talk focused on the ongoing military conflicts in Yemen and Iran. As of Mid-Day Friday, crude oil futures traded at $62 per barrel. March lumber traded at roughly $1,000 per 1,000 board feet. Gold for April delivery traded at $1,725 per ounce, down a whopping $75 from last Friday.
Beans Blast to New Highs
Soybeans shot up to new contract highs midweek but reversed and tumbled toward week’s end. Both the rally and the decline were impacted by dry weather, then a little moisture, in Argentina and the value of the U.S. dollar. Beans–and most exported commodities–suffered from dollar strength and were threatened by an upward spike in the greenback, which occurred early Friday. Soybeans for March delivery traded at $14.00 per bushel at noon Friday, up about 25 cents on the week.