Trade War Between US And China Brings Uncertainty To Ag Markets

LENNOX, S.D.-Economic experts say this was supposed to be an optimistic year for the ag industry, but now they’re just not sure. In the last two months prices on crops like soybeans and corn have dropped 20 percent. The culprit? The trade war between the U.S. and China.

It hasn’t taken long for trade war concerns to grow in the farming industry.

“In three to four weeks a lot of that optimism has been taken away and added uncertainty,” said Jack Davis, SDSU Extension Economics Field Specialist.

Davis says China’s tariffs on products like soybeans are affecting the market.

“For the China crush or use of those soybeans, we’re not competitive anymore.”

It’s caused prices to plunge.

“Here’s probably what’s made it so dramatic market-wise. We’ve lost 18 to 20 percent of the value of soybeans and corn until the end of May to last week and that’s big,” said Davis.

A drop that would affect Lennox Soybean Farmer Dave Poppens.

According to Dave Soybeans are currently down one and a half dollars, so if he were to sell today, he would lose 75 dollars per acre.

“Doesn’t leave us room for a profit if prices stay where they’re at,” said Poppens.

However, farmers aren’t the only ones affected. Stocks have been falling.

“People don’t want to invest their money when it’s all that uncertainty out there so you kind of get a withdrawal of say the funds that the speculators that are in the market, they want to sit back and see what’s happening before they stay in,” said Davis.

However, things can change before farmers harvest in a couple months.

“Again a lot can happen maybe we get a trade war settled . I think that’s our hope as a nation that we’ll straighten everybody out,” said Davis.

If that happens prices could rebound.

“It would be nice to get them sold at a profit before the spring comes around,” said Poppens.

The next possible victim of the escalating trade war could be ag retailers.If soybeans stay at a low price or drop further, farmers won’t spend as much on products and equipment.

 

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