CHICAGO — US soybean futures plunged 2.5% to a one-year low on Friday on concerns that escalations in a trade fight with China would threaten shipments to the biggest buyer of the oilseed, traders said.
US President Donald Trump announced hefty tariffs on $50 billion of Chinese imports on Friday, with collection beginning on July 6. China hit back, with its commerce ministry saying it will impose 25% tariffs on 659 US goods worth $50 billion in response, including soybeans starting July 6.
“We’ve spent much of the last couple months expecting this to be saber-rattling and something that would be resolved far before actual action takes place,” said Angie Setzer, vice president of grain at Citizens LLC, a grain elevator in Michigan. “But here we are.”
Trade concerns also weighed on the corn market as Mexico could strike at $4 billion in annual imports of US corn and soybeans if Trump escalates a trade spat with new tariffs, officials told Reuters this week.
Corn futures sank to their lowest in more than five months before recovering some of their losses.
US Agriculture Secretary Sonny Perdue, speaking on a conference call from Canada, said the United States has tools such as the Commodity Credit Corporation to aid farmers whose incomes are harmed by trade fights.
But he said it is too soon to assess such damage or how the government might respond.
“You can’t demonstrate any damage on the day that tariffs are announced,” Perdue said. “We’re going to look at this very carefully. We have been calculating market impact on a weekly basis for a number of months now.”
Asked whether declines in soybean prices demonstrate that farmers are already casualties of US trade wars, Perdue said that was unclear.
“Commodities are always in a roller coaster. I don’t think we can think we can definitely say this has been part of the trade disruption the last few weeks.”
Soybean futures have fallen for nine of the last 10 sessions as the rhetoric between China and the United States has heated up.
Forecasts for good weather around the US Midwest added to the pressure on corn and soybean futures as crops near key development phases. — Reuters