What Possible Disruption Is Coming That Requires China To Start Massive Stockpiling Of All Possible Commodities

• What Possible Disruption Is Coming That Requires China To Start Massive Stockpiling Of All Possible Commodities
  by Michael Every of Rabobank, via https://www.zerohedge.com/
  Today is like one of those rare occasions when the Broadway understudy for a leading role finds out that the star has the ‘flu (not Covid-19) and so they get to go in front of the audience for once. Yes, Europe, today is your time to shine: “Everything’s coming up Milhouse!”.
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  Or not. Because the pressure is certainly on.
  First, we have the ECB. The market whisper is that they have decided that a global backdrop where the Fed, BOE, RBA and RBNZ, among others, have all flagged that things remain grave, and that far more easing can still be; where a second wave of the virus is clearly evident; and where we are worryingly close to a Hard Brexit, is the right time to sell sunny economic uplands ahead. Or at least that is what the markets will perceive the outcome to be if we indeed see their economic forecasts revised upwards without the right serious tone. They will take that to mean that while everyone else is close to doing more, the ECB isn’t. And the impact, if we haven’t already seen it in buy-the-rumour, sell-the-fact manner, will be appropriate.  
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  Meanwhile, here is something to study. China has announced it plans to boost its strategic commodities reserves to assuage anxiety over energy and food security. Starting in 2021, it will make what Bloomberg calls “mammoth” purchases of crude, strategic materials, and farm goods, officials apparently say. This is being done to ensure China can ride out any repeat of this year’s supply disruptions, or a deterioration in trade relations with the US, for example. This is apparently part of the shift to “internal circulation”, or greater self-reliance, which is already being flagged, and which will kick in for the five year plan 2021-25.
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  Actually, those in the know know that this has already been happening across the board for some time: China has been swallowing up raw materials and strategic goods far in advance of what the economy needs right now. That means the drop in other imports –which are still down y/y overall even including this commodity surge– is even larger. (And why aren’t FX reserves rising even as the trade surplus soars…? Mmmm.)
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  What possible disruption could be on the horizon that would require China to have a large enough buffer of all conceivable inputs –in remote inland areas to boot– that it needs to use up its precious USD reserves in a bulk splurge now?
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