CNBC highlights how President Trump’s rapidly escalating trade war is putting farmers at risk
Washington, DC- Today, Congresswoman Cheri Bustos (D-IL-17) responded to news that Soybean futures have plunged to a nine-year low on the heels of President Trump launching trade wars against China, Canada, Mexico and the European Union.
As was reported in CNBC today, Soybean futures for July dropped more than 7 percent – the lowest since March 2009.
“Donald Trump is doing tremendous harm to hardworking family farmers across the heartland,” said Congresswoman Cheri Bustos. “It’s obvious that when President Trump launched his trade war, he was only thinking about what he could fit in a tweet rather than developing a real strategy to grow our economy. While I am disappointed to see soybean prices plunging, I am not surprised because the Trump Administration is shooting from the hip day after day. I’ll continue to try and work with Democrats and Republicans to stop this trade war from spiraling out of control, but real damage is already being done.”
Bustos, who is a member of Democratic House Leadership and a member of the House Agriculture Committee, represents the 17th Congressional District of Illinois where soybean farmers, corngrowers and pork producers have been hit hard as a result of the trade wars President Trump has launched. Soybean farmers are being hit especially hard since a quarter of Illinois’ crop is exported to China every year. If Illinois was its own country, it would be the fourth largest producer of soybeans in the world.
- Soybean futures for July delivery drop more than 7 percent to a low of $8.415 a bushel, their lowest since March 2009, according to Thomson Reuters.
- A war of words between the U.S. and China picked up overnight, following announcements of tit-for-tat tariffs on $34 billion worth of imports late last week.
- If Beijing imposed a 10 percent tariff on U.S. soybeans, total American soybean exports could drop by 18 percent, according to one study.
Soybean futures plunged Tuesday to their lowest in more than nine years following renewed concerns about a U.S.-China trade war.
A war of words between the two countries picked up overnight, following announcements of tit-for-tat tariffs on $34 billion worth of imports late last week. In retaliation against planned U.S. duties, Beijing intends to impose a 25 percent tariff on 545 U.S. goods, including soybeans.
Soybean futures for July delivery dropped more than 7 percent to a low of $8.415 a bushel, their lowest since March 2009, according to Thomson Reuters. They were trading near $8.64 a bushel as of 11 a.m. ET.
There are a lot of “unknowns and no confidence,” said Rich Nelson, director of research at Allendale, an agricultural market research and trading firm. He added that prices could reverse just as quickly if headlines on trade changed.
With Tuesday’s late morning sell-off, soybean prices are now more than 17 percent lower for the quarter and down more than 10 percent for the year.
Corn futures tumbled to their lowest price in more than six months. Wheat and oat futures fell roughly 1.4 percent and 3 percent, respectively, while rough rice futures were mildly lower.
“The dramatic drop today is soybeans because soybeans is first and foremost what the Chinese like to buy from us,” said Phil Flynn, senior market analyst at The Price Futures Group.
More than half of U.S. soybeans go to China, the world’s largest consumer of the beans.
If Beijing imposed a 10 percent tariff on U.S. soybeans, total American soybean exports could drop by 18 percent, according to a study for the U.S. Soybean Export Council by Purdue University agricultural economists Wally Tyner and Farzad Taheripour.
If China implemented a 30 percent tariff, total U.S. soybean exports could fall 40 percent, according to the study, released in late March. Prices would fall 2 or 5 percent over a few years, respectively, under the two different scenarios, the analysis said.
In addition to negative sentiment around the trade dispute, Flynn attributed the drop in soybean prices to dollar strength, which makes U.S. goods relatively more expensive overseas. The U.S. dollar index rose about 0.3 percent Tuesday and is up 5.5 percent this quarter.
“I think ultimately the world is going to buy our beans,” Flynn said. “The demand is there. People have to eat. The decrease in price may offset the fact there might be a tariff.”