As of May 26, the total U.S. federal debt has reached a historical high of $30.47 trillion, which is nearly 130% of its GDP. Based on the probability that U.S. debt doubles every 8 years since the 1980s, some analyses suggest that by 2030, U.S. debt could reach $60 trillion, or 250% of GDP.

It is not difficult to understand why many U.S. infrastructures are severely outdated, and why the U.S. federal government has repeatedly experienced shutdowns and closures. These are all due to a lack of funds and nowhere to offset deficits. For the heavily indebted U.S. economy, any additional expenditure will be extremely difficult.

This is particularly evident against the backdrop of a wave of U.S. debt sell-offs. In fact, since 2018, at least 30 global central banks holding U.S. debt have reduced their holdings to varying degrees. According to the latest International Capital Flows Report (TIC) data released by the U.S. Department of the Treasury on May 16, following the two-month statistical delay convention, global buyers sold a total of $97.3 billion in U.S. Treasury bonds in March.

China, Japan, Luxembourg, Switzerland, Brazil, Singapore, South Korea, Norway, Saudi Arabia, the Netherlands, Israel, Australia, the Philippines, Kuwait, Sweden, the United Arab Emirates, Italy, Vietnam, and Poland, these 19 countries all sold U.S. Treasury bonds to varying degrees in March.

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For example, the latest TIC report shows that China sold $15.2 billion in U.S. Treasury bonds in March, selling U.S. debt for four consecutive months since December last year. The total holding has now dropped to $1.0396 trillion, the lowest level of U.S. debt holdings since 2010, still making it the second-largest overseas holder of U.S. debt. Since February last year, when it held $1.1042 trillion, this means that over the past year ending in March, the cumulative reduction in scale reached $64.6 billion in U.S. debt.

Goldman Sachs analysts say that with high U.S. inflation and the acceleration of the global process of de-dollarization, the attractiveness of U.S. debt is continuously decreasing. Data shows that the U.S. CPI has been above 8% for March and April, and once hit a 40-year high of 8.5%, while the level above 5% has been sustained for at least 12 months.

The "Old Bond King" Gross said a few weeks ago that as U.S. inflation reaches 5%, he is significantly shorting U.S. Treasury bonds. This means that the U.S. economy needs to increase spending under high inflation levels, while finding financing to hedge deficits becomes more difficult. This predicament may spread to multiple areas of the U.S. economy, with the agricultural sector being very evident. Signs indicate that the heavily indebted U.S. economy is unable to cope with the wave of bankruptcies among U.S. farmers.

According to the latest report from the American Farm Bureau Federation, referring to Chapter 12 of the U.S. Bankruptcy Code for farm closures, 276 U.S. farms declared bankruptcy in 2021. Over the four years since 2018, as many as 1,933 U.S. farms have gone bankrupt, and over the past decade, a total of 4,569 U.S. farms have gone bankrupt. Just as the American ballad "Old MacDonald Has Gone Bankrupt" goes: "Old MacDonald had a farm... However, things have changed recently, Old MacDonald has gone bankrupt."

Although the numbers may not seem very large, it is well known that the U.S. farm economy is highly developed. The bankruptcy of one farm often affects many sub-sectors of U.S. agriculture, not only inducing unemployment and leading to a significant reduction in export income, but also damaging several areas in the U.S., including agricultural machinery and credit financing.

At the same time, the pressure on U.S. farmers to make a living is increasing, mainly due to various financial burdens caused by the decline in the agricultural economy and extreme weather conditions. Data shows that the proportion of U.S. agricultural debt to annual agricultural income is 97%, a 32-year high. Over the past two years, the pandemic's continued chain reaction on ongoing supply chain issues, global trade instability, high fuel/diesel prices, and shortages of fertilizers, various inputs, and agricultural machinery/parts has continued to complicate the already tense market environment in U.S. agriculture.It is noteworthy that, due to high inflation and the Federal Reserve entering a rate-hiking cycle, American farmers face a significant increase in costs when purchasing a range of production materials, including fertilizers and agricultural machinery. This has led to a heavy debt burden for American farmers. This further explains the ongoing "formula shortage" in the US market.

Data shows that over the past few decades, American dairy farmers have been hit particularly hard. In Wisconsin, dairy farmers have had to cease production and even declare bankruptcy due to high debts and costs. The cost to produce a gallon of milk is $1.90, but their returns could be as low as $1.35. The plight of American dairy farmers is just the tip of the iceberg of the difficulties faced by American farmers.

Since the 1980s, a significant portion of American farmers have spent decades getting out of debt. Recently, due to a lack of collateral or loans being considered too risky, an increasing number of American farmers have been denied financing. This has led some producers to sell part of their land, lose their right to redeem collateral, or file for bankruptcy, which is the greatest loss for any farm family.

Unfortunately, many American growers have faced the latest spring planting season in 2022. For example, hard red spring wheat in the northern United States is facing delayed spring planting due to excessive rainfall, and North Dakota, the largest spring wheat producing state, is experiencing the latest start to the planting season since 2011. In addition, due to high inflation in the United States, fertilizer prices have risen significantly. Leguminous plants can fix nitrogen absorption in the soil, while corn requires additional fertilizer. American farmers will plant more soybeans this year to replace previous corn production.

A week ago, it was analyzed and predicted that the US soybean production for the 2022-23 sales year is expected to be 4.64 billion bushels. In the 2021-22 sales year, the total US soybean production was 4.435 billion bushels, the largest to date. As a result, American farmers need to continuously find buyers for this single crop of soybeans.

It is worth mentioning that since 2018, over a considerable period, many American farmers have had to declare bankruptcy due to a sharp decrease in soybean sales and a significant drop in exports. Not only that, but data shows that from 2012 to 2021, the returns of American farms ranged from $58.6 billion to $134.5 billion, which directly indicates that the return rate of American farms has indeed fluctuated violently and is very unstable.

The USDA predicts a return of $95.2 billion for 2022, which is only at the median of this range. Obviously, despite global food prices rising this year, the actual profits of American farmers have decreased. Whether from the perspective of American dairy farmers or soybean farmers, American farmers have not benefited from the rise in global food prices.

It is worth mentioning that although the US federal government has proposed paying agricultural subsidies to American farmers since 2018, this has not stopped the wave of bankruptcies among American farmers, and a considerable portion of the subsidies have not been paid as scheduled. At the same time, due to the heavy debt of the US federal government itself, the funds that can be provided when American farms are in difficulty are almost a drop in the bucket.

Reuters analysts believe that the root cause of the wave of bankruptcies among American farmers is that American farmers underestimated the ability of global major customers to develop new suppliers in the past period. It is important to know that at the beginning of 2019, a large amount of American soybeans were left in the field, covered by heavy snow in winter. Some American farmers' soybeans had nowhere to store and the granaries were overflowing. There were also American sorghum ships turning back in the Pacific Ocean. American pork, corn, red wine, and cheese orders are not uncommon...

American farmer Jim Taphorn also sold all his tractors in that period. Therefore, for American farmers, they now know that the market is very important to them. Many farmers, including American soybean growers, may still be looking to the east.Taking soybeans as an example, according to the latest data released by Chinese customs in May as cited by the media, China received 1.64 million tons of soybeans from the United States in April, a decrease of 51.3% compared to 3.37 million tons in March, and a decrease of 23.7% compared to 2.15 million tons in the same period last year. From January to April, China imported 15 million tons of soybeans from the United States, lower than the 21.27 million tons in the same period last year. In other words, from January to April, 15 million tons of U.S. soybeans arrived in China, a decrease of 6.27 million tons compared to the same period last year, and U.S. farmers may need to explore more shares.

It is worth mentioning that earlier this year, due to unfavorable weather, the harvest and export of Brazilian soybeans were delayed. However, starting from April, the number of soybeans arriving in China from Brazil rebounded. From January to April, China imported 12.7 million tons of soybeans from Brazil, an increase of 97.8% compared to 6.42 million tons in the same period last year. Analysis suggests that in the first four months, the number of U.S. soybeans arriving in China exceeded that of Brazil, because the reduction in Brazilian soybean production led to higher prices, while U.S. soybean prices were relatively low.

In the overall import data of grain and soybean products, BWC Chinese website inquired about the latest customs data, showing that China imported a total of 50.61 million tons of grain from January to April, only slightly lower than last year's 0.3%, among which, the import quantity of corn and sorghum increased significantly. At the same time, from January to April, a total of 28.36 million tons of soybeans were imported, only slightly lower than the same period last year's 0.8%.

This means that by April, a total of 50.61 million tons of grain and 28.36 million tons of soybeans had arrived in China. Despite the global rise in grain prices, China's grain import volume still remains stable and diverse. Nikkei News reported not long ago that China has more than half of the world's grain reserves.

Analysis suggests that the above-mentioned quantity of grain and soybeans arriving in the Chinese market is enough to make U.S. farmers look forward to it. Kansas farmer Green Pierre said in an interview with BWC Chinese website reporters that the U.S. debt is too high, and at critical moments, we U.S. farmers still need to find customers by ourselves. We only care about market share and look forward to more orders.