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Soybean Dips Below $8 to 12-Year Low on US-China Trade Woes

May 13, 2019 at 18:38 by Andrew Moran

Soybean futures dipped below the $8 threshold to kick off the trading week on escalating trade tensions between the world’s two largest economies. Just days after the US raised tariffs on Chinese imports, Beijing retaliated with its own tariff hikes on American goods, including agriculture.

July soybean futures tumbled $0.0975, or 1.2%, to $7.995 per bushel at 17:39 GMT on Monday on the Chicago Board of Trade (CBoT). Soybean prices are now at their lowest levels in 12 years. Last week, soybean prices plunged nearly 4%, adding to their year-to-date losses to 13%.

On Friday, President Donald Trump tariffs from 10% to 25% on $200 billion in Chinese products. Despite urging Beijing not to take action, the world’s second-largest economy responded with its own tariff hikes. On Monday, China announced that it would hike import levies ranging from 5% to 25% on more than 5,000 US products. These retaliatory tariffs are scheduled to go into effect on June 1.

Only hours before China confirmed it was hiking tariffs, the president urged China not to retaliate, tweeting that it “will only get worse.”

Their (sic) is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today … China should not retaliate-will only get worse! I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!

But China’s Ministry of Finance responded in a statement that it “will never surrender to external pressure”:

The escalation of trade friction is not in the interests of the people of the two countries and the people of the world. China feels deeply sorry for that. If the US tariff measures are implemented, China will have to take necessary countermeasures.

When China initially retaliated to America’s import duties, it targeted the country’s agriculture sector, including soybeans. Since then, the soybean industry has been decimated, experiencing everything from rotting inventories to farm bankruptcies. Many farmers have gone as far as switching from soybean to other crops, such as wheat and cotton.

In other commodity markets, July corn futures tacked on $0.045, or 1.28%, to $3.5625 per pound. July wheat futures surged $0.1125, or 2.65%, to $4.36 a bushel. July orange juice futures fell $0.015, or 1.21%, to 96.20 cents a pound.

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