In case you were wondering, soybean farmers aren’t feeling any better about the worsening trade conflict between Donald Trump, “expert” dealmaker, and Xi Jinping, actual dictator.
Soybeans are of course on the front lines of the dispute, which means some folks are talking about them at the dinner table, and not because they’re an ingredient in what’s on the plates. Rather, because soybean farmers have become pawns in what amounts to a political chess match.
“While [soybeans] initially appear to satisfy the conditions of a rational target for a tariff (the US exports more soybeans to China than anywhere else), it is actually China’s most economically vulnerable import as there is no ‘spare capacity’ in global trade which can be rerouted towards China to compensate”, Goldman wrote last week, on the way to saying that despite the lack of sourcing options, soybeans are a good choice from Beijing’s perspective precisely because they are a “politically relevant good, given the importance of the farm belt in US politics.”
When last we checked in on the incredulous soybean farmer community, ASA President and Iowa farmer John Heisdorffer, was out with a new statement (i.e., a followup to remarks he made back in in April).
“Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports, so the math is simple”, he said, before clarifying things as follows:
You tax soybean exports at 25-percent, and you have serious damage to U.S. farmers.
Given what happened on Wednesday, it should comes as no surprise that soybean futures – already sitting at nine-year lows – took another hit. Notably, one contract fell to a new low, as futures for November delivery dove as much as 2.4% to $8.51 a bushel in Chicago. That would be the lowest since the contract began trading in November of 2014.
But don’t worry, Trump is on the job despite being preoccupied with the NATO summit.
Here’s what the President tweeted on Wednesday morning, in defense of the palpable angst he’s causing in the agricultural community:
…things up, better than ever before, but it can’t go too quickly. I am fighting for a level playing field for our farmers, and will win!
— Donald J. Trump (@realDonaldTrump) July 11, 2018
Whatever you say, sir.
Senior administration officials tried to reassure farmers on Tuesday, with one official claiming that “the agricultural community understands they’re not being treated fairly by China either.”
That’s likely to be small comfort in the interim period between now and whenever it is that America declares “victory” in the trade war.
Here’s what Peter Boockvar, CIO of the Bleakley Advisory Group, wrote this week:
Someone go tell the American farmer who will be harvesting their crop in a few months that this is all part of the negotiating process.
On the bright side, farmers will get a chance to express their consternation at the ballot box during the midterms in November.