class="post-template-default single single-post postid-301835 single-format-standard custom-background group-blog masthead-fixed full-width singular wpb-js-composer js-comp-ver-5.5.2 vc_responsive"
China Hits US Soybeans With Tariffs USDA: Tariffs Proposed by China Would Hit $16.5B in US Ag Exports | KTIC Radio

China Hits US Soybeans With Tariffs USDA: Tariffs Proposed by China Would Hit $16.5B in US Ag Exports

China Hits US Soybeans With Tariffs USDA: Tariffs Proposed by China Would Hit $16.5B in US Ag Exports
Image: iStock/Thinkstock

BEIJING, China, and CHICAGO (DTN) — Alan Kemper, a farm from Lafayette, Ind., and former president of both the American Soybean Association and National Corn Growers Association, woke up early Wednesday to see soybeans 40 cents down. He thinks it could get worse if China moves ahead with its announcement to slap a 25% higher tariff on soybeans.

Chinese officials responded quickly Wednesday to the Trump administration’s proposed 25% tariffs on $50 billion in Chinese imports by announcing higher tariffs on 106 more U.S. commodities, including soybeans.

The new reciprocal tariffs will be on products including soybeans, automobiles and chemical products, worth a total of $50 billion. Soybeans are at the top of the list.

The Chinese Ministry of Commerce did not indicate when the tariffs would take effect. If the tariffs go into effect, the tariffs on soybeans would go from 3% to 28%, according to the Foreign Agricultural Service.

The new battles over trade seem to dial back decades of work by commodity groups to build demand.

“We’re not helping our farmers at all right now,” Kemper said, pointing to the immediate price decline overnight. “It just kind of burns me that one person’s voice can overstep all of our gains in a breath or two.”

Kemper added, “To a lot of us this is like the ’83 market combined with the Carter embargo together.”

Even before the latest announcement, Kemper said farmers in his area were learning that banks were not going to renew operating loans for them in 2018. Banks were using “an abundance of caution” in their lending decisions, Kemper described.

“There were farmers who had forward contracted that had to go back and renegotiate to get out of those contracts,” Kemper said. “I’m sure this is making a lot of financial institutions really nervous right now.”

According to a USDA Foreign Agricultural Service Gains report Wednesday, the tariffs would hit $16.5 billion in agricultural exports from the U.S., “primarily targeting soybeans, corn and corn products, wheat, sorghum, cotton, beef and beef products, cranberries, orange juice, and tobacco and tobacco products.” Beef, which just got back into the Chinese market last year, was also included, according to the report.

Soybean futures were hit hard by the news, falling as much as 50-plus cents shortly after China’s announcement, said DTN Senior Analyst Darin Newsom.

Soybeans were the most vulnerable U.S. grain/oilseed market given China is the world’s largest buyer, the U.S. is already looking at potentially massive ending stocks of 740 million bushels at the end of August 2018, and U.S. farmers were likely to plant more than USDA’s recently estimated 89 million acres.

“We will have to see where the market stands after the initial dust settles, but with DJIA futures down 550 points, strong computer selling could hit all market sectors, including grain/oilseeds throughout the day,” Newsom said.

As for corn, spillover selling had the market under pressure to the tune of about 16 cents early Wednesday morning. The U.S. market has already seen ethanol exports cut, and now could face a slowdown in corn exports as well. All at a time when U.S. stockpiles continue to grow.

“I’ve said it numerous times, threats to demand are not good business when you continue to increase supplies. And now we find ourselves in what looks to be a full-blown trade war,” Newsom added.

China’s action comes after the Trump administration on Tuesday proposed 25% tariffs on $50 billion in Chinese imports to protest Beijing’s alleged theft of American technology.

Chinese television station CCTV reported that the action by the U.S. “was against the agreement of World Trade Organization (WTO) and had seriously infringed on the legitimate rights and interests of China and threaten the interests of China’ development.”

China’s announcement said that the implementation date will be determined by how the U.S. government imposes its tariffs against China’s goods, and will be announced separately.

Different departments of the Chinese government had released strong statements against the U.S. government’s proposal to impose tariffs on Chinese good.

“China strongly condemns and firmly opposes the U.S. tariff proposals and is ready to take reciprocal measures on U.S. products,” the Ministry of Commerce said in Beijing shortly after the U.S. announcement late Tuesday. The Ministry of Foreign Affairs also denounced the U.S. action as “unilateralistic and protectionist.”

News reports in China said that China attaches great importance to the development of China-U.S. economic and trade relations.

“As the largest developing country and the largest developed country, the economies of China and the United States are highly complementary,” one news report said. “Cooperation is the only correct choice between China and the United States. China and the United States should adhere to the principle of mutual respect and win-win cooperation, maintain rationality, strengthen communication, manage and control the differences in a constructive manner, and work together to safeguard the overall stability of China-U.S. economic and trade relations and the authority of the multilateral trading system, which will benefit the peoples of the two countries.”

While soybean prices plummeted in the U.S., the price of soymeal crept higher to RMB 41 per ton after China’s announcement.

© 2018 Nebraska Rural Radio Association. All rights reserved. Republishing, rebroadcasting, rewriting, redistributing prohibited. Copyright Information
Share: