Wednesday 12 December 2018
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Businessinsider - 27 days ago

US farmers are taking a beating from the trade war with China

Trade war is a major threat to farmers according to Rabobank. Chinese soybean imports fall for the first time in 15-years while prices are at their lowest for 10 years. A Trump administration subsidy is stemming panic-selling by farmers. US soybean farmers are bearing the brunt of Trump s trade war with China. China, the world s largest soybean buyer, has turned its attention to Brazil for the oilseed this year, leaving US farmers with large inventories they are struggling to sell, according to research from Rabobank a major agricultural lender. China has slapped 25% tariffs on US soybeans. US soybean farmers will suffer from the trade war, said Michael Magdovitz, Rabobank commodities analyst. Soybean prices are at 10-year lows of $8.30 a bushel with US farmers unwilling to sell at prices below their cost of production. Storage capacity in the US is vast but direct farm subsidies to farmers from the Trump administration designed to support the industry only covers about 10% of the price of soy. The issue has been exacerbated by the fact that US farmers planted a 2018/19 crop prior to the trade war s commencement, keeping production high and prices low. Chinese reduced its soyabean imports from the US for the first time in 15 years in 2018. But, Rabobank says this could change if a trade deal is reached or if adverse weather hits production in South America. Similarly, Rabobank s worst case outlines the possibility of China imposing a blanket ban on US soybeans or early crops out of South America which could further damage US farmers. Consumers outside of China will benefit from low-priced US soybeans. Meanwhile, Chinese consumers will suffer from the trade war, according to Magdovitz. Presidents Trump and Xi are set to meet at the G20 summit later this month which could provide further clarity on trade war concerns. Join the conversation about this story NOW WATCH: How Alibaba turned a fake holiday into a $25 billion shopping extravaganza that s bigger than Black Friday and Cyber Monday combined

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