Ask The Experts: January 3, 2019
Independent Transportation Analyst and Consultant
Q: How it's been going since Almo was inaugurated on Dec 1, 2018?
A: Almo was inaugurated in Mexico City on December 1st, and it’s been a rough start for those who saw “moderate” in him and for those who saw better cooperation with the US (the FT reported that POTUS calls him “Juan Trump”). In his inaugural address, the new President vowed to “end free-market policies” and decried liberalism. The FT has been particularly focused on him, as the headline “Investors in no mood for the Mexican leftist president” attests. Currently, Amlo is in a battle with the bondholders of the canceled MC airport project.
Q: What is the most current information regarding the US Grain market?
A: The unintended consequences of distortions in the soybean supply chain are a historical fact (the ‘90s trade war vs Japan helped jump-start the Brazilian soybean industry). Now, the US exports to China are down 44% through 9 months. Worse, the “normal” rail move of beans, a mostly for-export crop, from the upper Midwest to the PNW – perhaps the most lucrative rail market there is, or was - is a much lower return move to the Gulf to backfill Argentina (which sends their beans to China). Meanwhile climate change’s frontlines, if not in coral reefs, are in Ag, pushing corn northward, for example (Canadian corn crops?) In addition, the still stoutly GOP farm belt (helped by the US Government bribes, er… ”assistance”) is now all of a sudden finding storage prices going through the roof, in part because the tariff-inflated price of steel! Farm equipment growth will be down some 4/5 this year. And, the US trade surplus in Ag will be the lowest in a dozen or so years….
Q: Has rail traffic been increasing in North America?
A: North American Rail traffic is hanging in there – in fact, in week 50 (12/15) it was up 4% (carloads a bit less than +2%, intermodal up over 6%).
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