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Soybean Prices Fall to Decade-Low As Trump ‘Thinks About Our Farmers’

July 11, 2018 at 16:18 by Andrew Moran

Soybean futures are trading at their lowest levels in nearly a decade after the White House confirmed that it is assessing new tariffs on more Chinese goods, deepening trade spats between the world’s two largest economies. Can US soybean farmers ever recover from the contentious trade war?

November soybean futures plunged $0.17, or 1.95%, to $8.545 per bushel at 15:50 GMT on Wednesday on the Chicago Board of Trade. Soybean prices have plunged 19% since April, and they have fallen to their worst levels since December 2008.

On Tuesday, the Trump administration said it is looking at 10% tariffs on $200 billion in Chinese products, ranging from fish to luggage. US Trade Representative Robert Lighthizer said in a statement that the government is open and willing to a resolution to the trade disputes.

As in the past, the United States is willing to engage in efforts that could lead to a resolution of our concerns about China’s unfair trade practices and to China opening its market to U.S. goods and services

Both sides confirmed that no further negotiations are scheduled, and previous talks, including the meeting between Treasury Secretary Steven Mnuchin and Chinese economic envoy Liu He, have not ended successfully.

This comes days after the US slapped Beijing with import taxes on $34 billion in goods, prompting China to retaliate with tit-for-tat tariffs of the same amount.

After arriving in Brussels for this year’s annual NATO summit, President Donald Trump tweeted that he is “always thinking about our farmers”:

I am in Brussels, but always thinking about our farmers. Soy beans fell 50% from 2012 to my election. Farmers have done poorly for 15 years. Other countries’ trade barriers and tariffs have been destroying their businesses. I will open things up, better than ever before, but it can’t go too quickly. I am fighting for a level playing field for our farmers, and will win!

Unfortunately for the domestic agricultural sector, it may be a case of too little too late.

The soybean industry is projecting that the escalating trade between China and the US is likely to spur production efforts in Brazil, creating domestic shortages in the short-term. However, in the coming years, Brazil might become one of the biggest soybean trading partners with China.

Noticing an opportunity to boost trade with the US and receive preferential terms, the Indonesian government said it will scrap plans to reinstate an import tax on soybeans. In 2013, the country eliminated the import tax to limit rising food inflation, but, facing gaping budget holes, the trade ministry considered bringing it back.

Trade Minister Enggartiasto Lukita told reporters:

Tofu and tempe use soybeans from them and they are hard to replace, so we can’t put up a tariff as a barrier.

Moreover, China has made it clear that it plans to increase domestic soybean output over the next five years, subsidizing its farmers.

In other agricultural commodities, December corn futures shed $0.0625, or 1.73%, to $3.545 per pound. September wheat futures tumbled $0.13, or 2.64%, to $4.79 a bushel. September orange juice futures advanced $0.02, or 1.2%, to $1.685 a pound. September coffee futures slipped $0.0265, or 2.31%, to $1.121 per pound.

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