Grain, livestock prices collapse; soy, wheat groups frustrated
June 20, 2018
As grain and livestock prices collapsed on Tuesday, soy and wheat growers decried President Donald Trump's tariffs on steel and aluminum that have led to retaliatory tariffs on farm products.
Chicago Board of Trade soybeans fell as much as 6 percent, and wheat slumped more than 4 percent while corn, cotton and ethanol futures notched life-of-contract lows, Reuters reported.
The American Soybean Association and the National Association of Wheat Growers with U.S. Wheat Associates, a trade promotion group, issued statements on Tuesday pointing out that they expect to suffer from the additional tariffs that Trump on Monday threatened to impose on China.
Trump said if China retaliates against the tariffs on $50 billion in Chinese products then he plans to impose a 10 percent tariff on an additional $200 billion in Chinese goods.
"Soybean prices are declining as a direct result of this trade feud," said ASA President John Heisdorffer, an Iowa soybean grower. "Prices are down almost a dollar and a half per bushel since the end of May — and continue to plummet. That represents a loss of more than $6 billion on the 2018 soybean crop in less than a month. We have approached the Trump administration repeatedly and implored them to hear our side of this story."
ASA said it is disappointed and highly concerned that trade tensions continue to ratchet up rather than de-escalate between the two countries and that its repeated requests to the administration for a non-tariff solution that does not threaten the market stability and livelihoods of soy growers has not been put forward.
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Last Friday, ASA pointed out, China responded in kind to the United States' 25 percent tariffs on $50 billion of Chinese products under Section 301 of the Trade Act of 1974 with its own 25 percent tariffs on $50 billion of American goods, including soybeans. In 2017, China imported 60 percent of total U.S. soybean exports, representing nearly 1 in 3 rows of harvested soybeans, with a value of $14 billion.
Meanwhile, in a joint news release, NAWG and U.S. Wheat Associates said, "The familiar African proverb says that when elephants fight, it is the grass that suffers. Unfortunately for America's farmers, that grass is the wheat growing in their fields as the big guys in Washington, D.C., and Beijing escalate their trade fight.
"China's state-run importing agency and private flour millers bought an average of more than 1.1 million metric tons of U.S. wheat the past five years because our farmers produce higher quality grain than China can grow on its own. Following the Trump administration's announcement of new tariffs on $50 billion of imported Chinese goods, China hit back with tariffs of its own, including a 25 percent tariff on U.S. wheat imports. In response, the White House is ordering trade officials to draw up a list of $200 billion worth of Chinese goods that would be hit with a 10 percent tariff on top of the 25 percent tariffs already promised. In a trade war, agriculture always gets hit first and the effects of these tariffs could prove devastating for farmers," the press release said.
"No one in China will be hurt if the retaliatory U.S. wheat tariff is implemented. China has huge amounts of stored wheat, and they can purchase what they need from Australia, Canada or even Kazakhstan, although Chinese consumers will miss the opportunity to experience higher quality products made from U.S. wheat," the release added. "Instead, the outcome is likely to further erode the incomes of farm families who strongly support addressing the real concerns about China's trade policies."