Trump’s ‘Tough Love’ In Trade Talks Is Strangling U.S. Soybean Farmers

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Donald Trump seems to relish the trade fight he’s having with Beijing: “I love the position we’re in” the U.S. President said this week. Soybeans farmers would beg to disagree.

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hit an 11-year bottom of under $8 per bushel on Monday as an escalating trade war dimmed hopes that China, the number one consumer of all soy products, will resume purchases of the commodity from the United States anytime soon. While the market had recovered from those lows by Wednesday, bean futures remained down 17% on the year.

Other soy products weren’t in too great shape either.

Soyoil futures were down 11% year-to-date while soymeal futures were 21% lower on the year—faring as the biggest loser on the U.S. agricultural complex.

Analysts said that unlike oil and other commodities, soy had specific sources of demand and no country bought more of it than China.

And unfortunately for U.S. farmers, soybeans are among the products at the center of President Trump’s tariffs strategy to impact trade policy.

China buys 60% to 65% of world soybean imports and the U.S. exports nearly half of its soybean production to the Asian country.

Since this week began, the trade war between the world’s two biggest economies has entered a new level of acrimony. The Trump administration aims to bring more than $500 billion of Chinese goods to a 25% tariff from a previous 10%. China seeks to apply similar levies on $60 billion worth of American goods. It already has a 25% counter-tariff on U.S. soybeans.

Trump welcomed the fight back by China this week, saying: “There can be some retaliation, but it can’t be very substantial by comparison.”

The president dialed back some of his own tough talk on Tuesday, saying he will meet Chinese leader Xi Jinping at the G-20 summit in Japan in late June, indicating there was still hope for a trade deal.

Otherwise, Trump told a news conference at the White House that the U.S. will be taking in “tens of billions of dollars” in tariffs from China. Some economists argue that the president’s concept over the use of tariffs was flawed as it was U.S. consumers who would ultimately pay for them, since the companies facing the levies would pass the cost on buyers.

Dan Hueber, author of the Hueber Report on grains out of St Charles, Illinois, characterized the one-step forward, two-steps back outcome in the trade talks to a boxing match where the trainers themselves were responsible for the regress of their fighters.

Hueber wrote:

“It seems for months bulls have been pressed against the ropes round after round, forced into little more than holding a desperate defensive position believing that the bear would eventually grow tired from the relentless attack. The problem was, between rounds the bears seemed to have an endless supply of an energy drink delivered to the ring from trade negotiators.”

The outlook for soy products has suffered without any certainty of more Chinese buying from the U.S. China did buy several rounds of American beans earlier this year as goodwill gestures when trade talks between the two sides were doing better. has a “Strong Sell” recommendation for U.S. soybean futures in its daily technical outlook, where Level 3 support, the strongest, is pegged at $7.79 per bushel. Based on Wednesday’s early trade of $8.32 for a bushel of soybeans, that signals a potential downside of another 6%.

Trade war aside, one reason for soybeans’ dismal outlook has been the dreaded African Swine Fever which was obliterating China’s hog herd faster than thought. The hogs consume either soymeal or soybeans that are crushed into feed.

China’s Ministry of Agriculture and Rural Affairs said recently that about 18% of the country’s hog herd has been lost to the swine fever in just over eight months.

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