From the time Donald Trump announced his unilateral imposition of tariffs on products coming from China through China’s imposition of strategically aimed retalliation it has in some ways resembled a couple of old men playing a bluffing game. Certainly many felt that when the crop started to come in negotiations would move along and the bluffing would end.
Well, things are now getting real. Soybean crops are for the most part in. Prices are near an all time low and even at that there are no buyers. The President of the United States pissed off our best customer and they quit buying. Beans are a commodity that won’t last forever, and if there are no immediate customers they must be stored.
From a Reuters story on the soybean situation:
Across the United States, grain farmers are plowing under crops, leaving them to rot or piling them on the ground, in hopes of better prices next year, according to interviews with more than two dozen farmers, academic researchers and farm lenders. It’s one of the results, they say, of a U.S. trade war with China that has sharply hurt export demand and swamped storage facilities with excess grain.
U.S. farmers planted 89.1 million acres of soybeans this year, the second most ever, expecting China’s rising demand to give them better returns than other bulk crops.
But Beijing slapped a 25 percent tariff on U.S. soybeans in retaliation for duties imposed by Washington on Chinese exports. That effectively shut down U.S. soybean exports to China, worth around $12 billion last year. China typically takes around 60 percent of U.S. supplies.
Farmers are feeling the pinch (for storage). Those in central Illinois could pay up to 40 percent more than in previous years to store crops over the coming weeks, agricultural consultant Matt Bennett estimated.”
The President picked a fight. Like so many wars recently, the one picking the fight is not the one who fights the fight. Farmers particularly in Iowa and the midwest could be greatly harmed in this “war” while the one who started the fight skates off, consequence free.