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Like their U.S. counterparts, Brazil’s farmers produce much more grain than is needed at home. Foreign customers are responsible for the country’s agricultural boom. Nearly 80 percent of Brazil’s soy exports now head to China.

The city of Luís Eduardo Magalhães is a testament to the importance of this international trade. Located in the state of Bahia, with farms stretching in every direction, the formerly unincorporated rural area in less than two decades has swelled to 85,000 people. That is bigger than Sioux City, Iowa’s fourth-largest city.

Major employers in Luís Eduardo, as most locals call the city, include fertilizer factories, seed producers and processors of soy and cotton. The area “relies 100 percent on agriculture,” said Carminha Maria Missio, a farmer and president of the local growers union.

While Brazil’s overall economy is stuck in a ditch, the nation’s farm sector rolled to 13 percent growth last year. The John Deere dealership in Luís Eduardo saw its sales rise 15 percent in 2017 and is expecting double-digit growth again this year, managing partner Chico Flores Oliveira said.

The local real estate market is surging too. Another new luxury condo tower is slated to open next year. Single-family homes are sprouting throughout the city. Prices for prime farmland are up 37 percent since 2012, according to consultancy Informa Economics IEG FNP.

Brazil’s total soy area is expected to expand to a record 36.28 million hectares this season due to robust Chinese demand, according to a Reuters poll of analysts.

Farmers here also are bullish on this month’s presidential election in Brazil. Far-right candidate Jair Bolsonaro, who is leading in the polls, favors rolling back fines for farmers who deforest illegally or break other environmental laws. Like Trump, Bolsonaro, is wary of China. But producers here trust him not to blow it on trade.

“Rural producers support Bolsonaro emphatically,” said Congresswoman Tereza Cristina, head of the powerful agriculture voting bloc in Brazil’s Congress. “We have access to him…and I am certain that he is smart and sensible.”

U.S. Farm Belt Pinched The outlook is much gloomier in Iowa, the long-established heart of U.S. agriculture.

It is the nation’s top corn-producing state and the No. 2 producer of soybeans. But its access to some global markets has suffered under Trump.

The president walked away from the Trans-Pacific Partnership, a trade agreement that would have opened valuable markets such as Japan to more American ag products. His renegotiation of the NAFTA accord had Mexico, the largest importer of U.S. corn, exploring other suppliers, including Brazil. Now the Chinese are pulling back.

Boone lays smack in the state’s center, surrounded by miles of row crops, hogs and poultry. Farmland values here fell 12 percent from 2012 to 2017, according to Iowa State University. Worries about the U.S.-China trade war loomed over the recent Farm Progress show, which comes to town every other year.

Equipment dealer Lee Randall jotted down prices at an auction of used tractors and implements at the show. Prices have dropped on trade tensions and low crop prices, he said, shaking his head as a green and yellow Deere & Co combine sold for $118,000 and another fetched $82,000.

“Five years ago you could have added 30 percent to every one of these pieces,” said Randall, whose business, Randall Brothers, is based in Ohio.

Nearby, Brett Begemann, chief operating officer for Bayer Crop Science said farmers were likewise scrutinizing purchases of seeds and chemicals. The trade dispute is making it difficult for Bayer to predict 2019 earnings for its agriculture unit.

A two-hour drive north of Boone in Algona, Iowa, a town of about 5,500 people, farm doldrums are crimping business at the local Deere and Harley-Davidson Inc dealerships, the operators said.

“Ultimately this area lives and dies by the farmer,” said Jim Wilcox, an owner of the Harley store.

Farmers’ woes are showing up on bank balance sheets as well. The proportion of the region’s agricultural loans reported as having repayment problems was up in the second quarter, reaching mid-year levels not seen since 2002, according to the Federal Reserve Bank of Chicago.

Rodney Jensen, who farms near Algona, regrets not making deals to sell soybeans from his autumn harvest when prices were higher. Like many, he is storing his crop, waiting for better times.

He worries China will not buy as much U.S. soy as it used to, even if the two nations patch things up.

“It’s been pretty pessimistic around here,” Jensen said.

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Airbus kicks off Paris Airshow with a new plane announcement

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The Airbus logo on a glass sign in Toulouse, France.

Balint Porneczi | Bloomberg | Getty Images

The European plane-maker Airbus has kicked off the 2019 International Paris Airshow with the launch of a long-range, single-aisle airliner and an announcement that they have agreed to sell 100 planes to the U.S. plane lessor Air Lease Corporation.

The Los Angeles based aircraft leasing company, has agreed 27 firm orders of the new Airbus A321XLR, 23 Airbus A321neos and 50 A220-300s.

Air Lease Corporation, founded from scratch in 2010, now has 387 Airbus aircraft and is the European plane maker’s third largest leasing customer.

At the same conference, Airbus unveiled details of its A321XLR – the latest evolution of the company’s hugely successful A320 series.

At a press conference Monday, Airbus claimed the plane now boasted the longest single-aisle plane range in the world at 4,700 nautical miles. The plane can take 244 passengers but on a long-range trip, the number of seats would reduce to about 200.

Airbus said the routes would now open up to operators who had an interest in flying routes such as India to Europe or China to Australia.

The chief commercial officer for Airbus, Christian Scherer, said the new plane would come with a newly designed fuel tank that could carry nearly as much fuel as a bigger twin-aisle plane.

No catalog price was offered for the plane but Scherer added that it had a “health commercial premium” over earlier versions.

The latest version of the XLR is entering an area of the market that the industry expected rival Boeing to address with the announcement of the NMA (New Midsize Aircraft), known alternatively as the 797.

Earlier Monday, Boeing poured cold water on any new plane announcement of its own but said it could “continue to work on the business case of the NMA.”

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Huawei slashes revenue forecast amid US pressure in trade war

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A Huawei logo displayed at a retail store in Beijing.

Fred Dufour | AFP | Getty Images

Huawei will reduce its production capacity which could hit revenue growth, the CEO of the Chinese tech giant said on Monday, as he revealed his plans to deal with the continued pressure from the U.S.

“In the next two years, I think we will reduce our capacity, our revenue will be down by about $30 billion dollars compared to forecasts, so our sales revenue due this year and next will be about $100 billion,” Ren Zhengfei, founder of the telecoms equipment giant said, adding that the firm will regain its “growth momentum” after 2020.

Huawei is currently on a U.S. blacklist that restricts American businesses selling products to the Chinese firm. The restrictions have affected Huawei’s business as it relies on American suppliers for components and software in several of its products including smartphones and laptops.

Huawei reported revenue over $100 billion for the first time in 2018 — about 19.5% higher than 2017. Ren’s comments suggest that revenue growth will be roughly flat in 2019 and 2020.

We are strong, I think there is no way we can be beaten to death.

Ren Zhengfei

Huawei founder

Ren said the company is also looking at creating different versions of its products.

“In the next two years, we are going to do a lot of switch over of different product versions that will take time and that will take time to ramp up, and it will take some time to test whether that works,” he said in Mandarin, according to a Huawei translation. “After that step, we will be stronger.”

Ren did not specify whether this meant using components from different suppliers.

Huawei has been developing its own operating system, which CNBC reported could be ready later this year in China. The company was also forced to scrap a planning laptop launch. Huawei’s consumer business CEO Richard Yu told CNBC that the move was a result of the company being on the U.S. blacklist.

Ren said the company will continue to work with American companies if it can.

“In the past, when we were not as strong, we were determined to work together with U.S. companies. In the future, we will be more determined to work with US companies. We are to afraid of using U.S. components, we are not afraid of using U.S. elements,” Ren said.

“We are strong, I think there is no way we can be beaten to death,” he added.

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It’s ‘complicated to negotiate with the EU’, Wilbur Ross says

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The United States is finding it difficult to negotiate trade with the European Union, U.S. Commerce Secretary Wilbur Ross told CNBC Monday.

Both sides of the Atlantic have been at odds over trade ever since President Donald Trump took office back in 2016. Since then, the president ended trade negotiations between the U.S. and the EU over a wide-ranging deal (the Transatlantic trade and investment partnership – TTIP), has imposed tariffs on European steel and aluminium products, as well as threatened to slap further duties on European carmakers.

“For the moment, it’s complicated to negotiate with the European Union, because they just had their parliamentary election, they haven’t picked a new president of the European community yet, they haven’t picked a new trade commissioner and so there’s really nobody to negotiate with who will be around in the long term,” Wilbur Ross, the U.S. Commerce Secretary told CNBC’s Phil LeBeau at the Paris Airshow.

European citizens voted at the end of May on new lawmakers that will sit in the European Parliament, starting July 2. The new chamber will be responsible for approving, alongside with the 28 country leaders, a new president of the European Commission – the EU’s executive arm.

The new European Commission President is expected to start the mandate on November 1. Until then, the current team will be responsible for carrying on with the day-to-day activities of the institution, including negotiating trade deals.

“The way the European Commission works, the trade commissioner needs to get a mandate from all the countries before he or she is able to have meaningful negotiations so it’s probably going to be some time in the fall before anything in substance gets going,” Ross said.

Europe’s trade commissioner, Cecilia Malmstrom, got a mandate from the 28 European countries in April to reach a deal with the U.S. over industrial goods. However, the European Commission has previously said that Washington has not said yes to starting official rounds of talks, despite the EU being ready to do so.

There’s one big motivation for Europe to reach a deal with the U.S.: preventing duties on its carmakers – a sector responsible for much of the economic growth in the region.

“I’m an optimist by nature so I think there’s a very good chance we will work something out with them,” Ross said about a deal with Europe.

“But if not, the President is totally comfortable going the other direction,” he added, hinting at the chance of car tariffs.

Trump announced last month that he would delay tariffs on cars and auto part imports for up to six months as discussions with the European Union and Japan take place and while he seeks to conclude talks with China. The president had threatened as early as last year that he would slap a 25% tariff on car imports from the European Union.

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