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Every year, there seems to be a single common factor affecting much of the world’s agro-industry – or at least a hemisphere’s worth. This year there are two.

The first is the weather. This is becoming more and more of a common event. Whether one interprets climate change as man-made or natural, it is hard to deny that the climate itself is changing.

What is really affecting agriculture per se is not the change itself, but its volatility. Hot spells are followed by flash floods or freezes. Storms are stronger and weather peaks and troughs more extreme. Late frosts seem to be more of a danger than they were – witness the damage caused in Europe last year and in China this year.

It is hard enough to predict ‘normal’ weather. Predicting ‘abnormal’ weather is close to impossible. Therefore it is hard to forecast what is going to happen in the second half of this year, except that it will be unexpected.

The second major issue this year is the trade war. The USA’s President Trump has decided to launch the largest trade war in living memory, slapping tariffs on goods from most European countries, Mexico, China and even Canada. Unsurprisingly, these countries have riposted with tit-for-tat tariffs on US goods. And this on top of sanctions against Russia and Iran.

At the time of writing there is still a ‘consultation period’ before many of the US tariffs come into force, but it is unlikely that Trump will want to show weakness by scrapping the new US tariffs but, then again, Trump’s mind seems as unpredictable as modern weather, so who can say?

Whether the tariffs, on both sides, come into force or not, and are short-lasting or longlasting makes little difference: industry has to prepare for them anyway and, in the case of the UK, this is at a time when the UK seems incapable of forming trading relationships with anyone as time runs out before the country pulls out of the EU.

The perfect trade storm? If not, then close to it.

Download your free copy

Click the button below to download your copy of the 'Half Year Outlook 2018: Agricultural Commodity Markets Review for H1' by IEG Vu.

If this topic is of interest, please contact us to find out how Agribusiness Intelligence can further help in this and other areas of importance.

IEG Vu Half Year Outlook 2018

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