Soybean prices rise but hold close to multiyear lows amid US-China trade war
- Soybean prices rose 1% on Tuesday.
- Markets are weighing expectations for a smaller-than-expected autumn harvest with trade war escalations.
- Watch soybeans trade in real time here.
Soybean futures rose Tuesday after disappointing US crop data. But prices held close to multiyear lows as escalations in the trade war between the US and China, the world’s largest importer of soy, showed no signs of letting up.
Soybeans were up as much as 1% to $8.90 a bushel at 1:45 p.m. ET after the Department of Agriculture reported crop conditions that were below market estimates Monday, raising concern that there could be a smaller-than-expected autumn harvest.
Last month, the Trump administration enacted a 25% punitive tariff on roughly $34 billion worth of Chinese goods and has threatened to slap additional duties on nearly all Chinese imports to the US. The move prompted Beijing to impose retaliatory tariffs on the same amount of US goods, including soybeans.
China has since been trying to reduce domestic reliance on American soybeans by lowering trade barriers with other exporters of the legume. Still, it may have to resume buying US soybeans despite import taxes, Oil World analysts said in a note according to Reuters.
Negotiations between Washington and Beijing have been an uphill battle. China said last week it would hit the US with retaliatory tariffs on an additional $60 billion worth of goods if the Trump administration followed through with threats to more than double its tariff rate in the future.
“The market is losing faith that there will be a resolution in the near-term,” Kevin McNew, an economist at Farmers Business Network, told Business Insider.
Following backlash among American farmers who make up key parts of Trump’s political base, the Department of Agriculture last week rolled out $12 billion in emergency aid to farmers hurt by its trade policies. The controversial plan would include direct payments to farmers, trade promotion abroad, and government buyouts of surplus agricultural goods.
McNew called the aid program an “economic band-aid” and warned it could be an indicator the trade war will not be resolved anytime soon.
John Heisdorffer, president of the American Soybean Association, said in a statement last week the program could be used as a supplemental measure for now. But he emphasized that removing protectionist policies as the most effective longterm solution for soybean farmers.
“The certainty and stability of our industry depends on, number one, getting these tariffs removed as quickly as possible and, number two, taking steps now to offset the damage done by this trade war by negotiating trade agreements and funding programs essential to opening new markets for our farm products,” Heisdorffer said.
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