China’s move to stimulate its economy raised eyebrows among agricultural market advisors and traders, suggesting the top foreign buyer of U.S. farm products may be joining an apparent broader attempt to use inflation as a means out of the world’s economic troubles.
On Nov. 30, China’s central bank said it will reduce the reserve ratio requirement for over 20 financial institutions in the country by half a percentage point, the first such increase since 2008. China hiked the ratio five times earlier this year, according to media reports.
The move followed coordinated actions by the U.S. Federal Reserve and central banks in Europe to make it cheaper for other banks to borrow dollars, triggering sharp rallies in global stock markets. Reaction in Chicago’s commodity markets was more subdued, with corn, soybean and cattle futures rising modestly on the week. Hog futures fell.