Finance
Soybean prices rise, hold close multiyear lows in US-China trade war
Soybean
futures rose Tuesday after disappointing US crop data. But
prices held close to multiyear lows as escalations in the trade
war between the US and China, the world’s largest importer of
soy, showed no signs of letting up.
Soybeans were up as much as 1% to $8.90 a bushel at 1:45 p.m.
ET after the Department of Agriculture reported crop
conditions that were below market estimates Monday, raising
concern that there could be a smaller-than-expected autumn
harvest.
Last month, the Trump administration enacted a 25% punitive
tariff on roughly $34 billion
worth of Chinese goods and has threatened
to slap additional duties on nearly all Chinese imports to the
US. The move prompted Beijing to impose retaliatory tariffs on
the same amount of US goods, including soybeans.
China has since been trying to reduce domestic reliance on
American soybeans by lowering trade barriers with other exporters
of the legume. Still, it may have to resume buying US soybeans
despite import taxes, Oil World analysts said in a note according
to Reuters.
Negotiations between Washington and Beijing have been an uphill
battle. China said last week it would hit the US with retaliatory
tariffs on an additional $60 billion worth of goods if the Trump
administration followed through with threats to more than double its tariff
rate in the future.
“The market is losing faith that there will be a resolution
in the near-term,” Kevin McNew, an economist at Farmers Business
Network, told Business Insider.
Following backlash among American farmers who make up key parts
of Trump’s political base, the Department of Agriculture last
week rolled out $12 billion in emergency aid to farmers hurt by
its trade policies. The controversial plan would include direct
payments to farmers, trade promotion abroad, and government
buyouts of surplus agricultural goods.
McNew called the aid program an “economic
band-aid” and warned it could be an indicator the
trade war will not be resolved anytime soon.
John Heisdorffer, president of the American Soybean
Association, said in a statement last week the
program could be used as a supplemental measure for now. But he
emphasized that removing protectionist policies as the most
effective longterm solution for soybean farmers.
“The certainty and stability of our industry depends on, number
one, getting these tariffs removed as quickly as possible and,
number two, taking steps now to offset the damage done by this
trade war by negotiating trade agreements and funding programs
essential to opening new markets for our farm products,”
Heisdorffer said.
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