Connect with us

Finance

US farmers are taking a beating from the trade war with China

Published

on


Soybean farmer Illinois
Farmer
Jim Schielein inspects a field of soybeans on his farm in Dixon,
Illinois

Jim
Young/Reuters


  • Trade war is a major threat to farmers according to Rabobank.
  • Chinese soybean imports fall for the first time in 15-years
    while prices are at their lowest for 10 years.
  • A Trump administration subsidy is stemming panic-selling by
    farmers.

US soybean farmers are bearing the brunt of Trump’s trade war
with China. 

China, the world’s largest soybean buyer, has turned its
attention to Brazil for the oilseed this year, leaving US
farmers with large inventories they are struggling to sell,
according to research from Rabobank — a major
agricultural lender. China has slapped 25% tariffs on US
soybeans. 

“US soybean farmers will suffer from the trade war,” said Michael
Magdovitz, Rabobank commodities analyst.

Soybean prices are at 10-year lows of $8.30 a bushel with US
farmers unwilling to sell at prices below their cost of
production. For the previous two years, prices have hovered
between $9 and $10.50. Storage capacity in the US is vast but
direct farm subsidies to farmers from the Trump administration
designed to support the industry only covers about 10% of the
price of soy.

The issue has been exacerbated by the fact that US farmers
planted a 2018/19 crop prior to the trade war’s commencement,
keeping production high and prices low. 

Chinese reduced its soyabean imports from the US for the first
time in 15 years in 2018. But, Rabobank says this could change if
a trade deal is reached or if adverse weather hits production in
South America. 

Similarly, Rabobank’s worst case outlines the possibility of
China imposing a blanket ban on US soybeans or early crops out of
South America which could further damage US farmers. 

“Consumers outside of China will benefit from low-priced US
soybeans. Meanwhile, Chinese consumers will suffer from the trade
war,” according to Magdovitz.

Presidents Trump and Xi are set to meet at the G20 summit later
this month which could provide further clarity on trade war
concerns. 


Rabobank soyabean chart
Rabobank chart showing
Chinese soybean imports

Rabobank

Continue Reading
Advertisement Find your dream job

Trending