Trade

Farmers Inexplicably Bet On Trump’s Trade War Ending

JM Ashby
Written by JM Ashby

This is such a poorly conceived idea, I physically cringed while reading it.

Some soybean farmers who've lost access to the biggest consumer market in the world (China) because of Trump's trade have sold their crops to other markets for less money just to get rid of it, but many others are not selling.

For reasons I cannot fathom, Bloomberg reports that soybeans farmers are stockpiling nearly a billion (955 million) bushels of soybeans in storage because they believe Trump's trade war will end soon.

The hope is that over the next few months, trade tensions will ease, and China, the top market for the oilseed, will start buying from American farmers again, lifting depressed prices in the process. A bushel of soybeans fetched just $8.87 on Friday. Eight months ago, before trade tensions led to tariffs, it was about $2 more.

The risks are great. While futures trading indicates higher prices next year, that could change depending on trade negotiations and rising supplies. Moreover, the crop could go bad on them. Soybeans are not corn. They don’t store nearly as well. If not kept super dry, they can take on moisture fast. Rot quickly follows, making them worthless -- and gross.

As of this writing, we still expect Trump will announce additional tariffs on over $250 billion in Chinese goods in December and formally impose the tariffs in February.

Trump's previous round of tariffs on $200 billion in Chinese goods is also set to automatically increase from 10 to 25 percent on January 1st.

There's no reason at all to think Trump's trade war is going to end "over the next few months." On the contrary, everything we currently know tells us the trade war is going to dramatically escalate over the next few months. The trade war will only end if Trump backs away from virtually everything he has said about it and I personally don't see that happening.

The thing is - even if Trump called off his trade war tomorrow, there's no guarantee China will start buying American soybeans again. They've already replaced their imports with soybeans from Brazil.

  • muselet

    Clearly, there are some soybean farmers who haven’t been paying attention to the Chinese leadership, which is more than willing to wait the US out in Donald Trump’s trade war.

    Refusing to sell their crop will likely be catastrophic; selling their crop for the current market price will likely be merely ruinous. What a choice to have to make.

    –alopecia

    • At this point, I say screw them. If they’re too stupid to look after their own interests just to own the libs or whatever, then I’m done feeling sorry for them. Yeesh.

  • Christopher Jones

    There is another revolting knock-on effect of China now sourcing their soybeans from Brazil. I fear the ramped-up demand for Brazilian soybeans will further empower the new hard-right wing Brazilian president to annihilate the remaining Amazon rainforests for soy crops.

  • Aynwrong

    They are doubling down on their own downfall which many if not most of them voted for. Unreal. This is like watching a snake eating it’s own tail.

  • katanahamon

    I believe the phrase “use it or lose it” applies here. The only good to come from this might be a lesson learned by farmers. However, given that we are still allowing Fox to exist and spew lies and propaganda 24/7 perhaps no good at all will happen. They’ll find another boogeyman or boogeyissue to blame, and we can roll our eyes and scratch our heads at the next ludicrous episode.

    • mnpollio

      My goodness – is it even possible for US farmers to learn anything at this point? What is obvious to most seems a hidden secret to them. I guess gambling their future on someone who shares their personal prejudices and is willing to rain hell down on “undesirables” outweighs their desire for success. Too many people in our country are willing to vote against their own self interest in order to make people they do not like suffer. Talk about sad.