More pain for crop markets as Donald Trump ratchets up trade war again
Chicago soybean futures headed for their worst week in almost three months, while hogs were set for the biggest slump in a year.Updated: Aug 02, 2019 11:19 IST
A fresh salvo from Donald Trump in the U.S.-China trade war has roiled agriculture markets and prompted criticism from American farmers.
U.S. President Trump abruptly escalated his trade war Thursday, announcing new tariffs on the Asian nation’s imports and bringing a surprise end to the truce in place since he met Chinese counterpart Xi Jinping in Osaka at the end of June.
Chicago soybean futures headed for their worst week in almost three months, while hogs were set for the biggest slump in a year.
The latest missive underscores how tenuous the situation is for American farmers, who have faced retaliatory Chinese duties for more than a year. Demand for U.S. agriculture has languished at a time when producers have also battled wild weather and bulging inventories.
“Trade policy is not a game -- it has real and serious consequences for rural America,” said Roger Johnson, president of the National Farmers Union, the nation’s second-largest general farm organization.
“Immediately after President Trump tweeted his tariff threats, already low commodity prices slipped yet again, but the long-term implications for our country’s reputation as a reliable trading partner are likely to be even more damaging,” Johnson said in a statement. “It may take President Trump just a few minutes to write 280 characters, but family farmers and ranchers could be dealing with the fallout for decades to come.”
Shares of agricultural giant Bunge Ltd. fell Thursday, while Archer-Daniels-Midland Co. pared earlier gains.
“It’s a risk-off trade,’’ Don Roose, president of brokerage U.S. Commodities in Iowa, said by phone. “We had a prelude that things were not going well, and the announcement of the new tariff was all it took to take this market down.’’
ADM earlier Thursday said it was stepping up a cost-cutting drive to fight thin industry margins as a resolution to the U.S.-China trade war takes longer than expected. Bunge is also going through a similar process, while Cargill Inc. said last month that it was reviewing its business plans due to a slowdown in earnings and headwinds to its operations.
While the Trump administration has unveiled two rounds of federal aid to help farmers mitigate their losses, most growers have said they’d rather see an end to the dispute. China, the world’s biggest consumer of soy, pork and cotton, has largely snubbed American purchases during the spat.
U.S. agriculture players have expressed concern that China is now strengthening ties with rival producers and may not return to the American markets with full strength even if a trade deal is reached. Some traders are waiting to see how China retaliates against the latest tariffs and fear crop prices could take another leg down when that happens.
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)