Trade War Rips Through Farm World; Soybean, Hog Prices Fall

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(Bloomberg) -- Soybean and hog futures fell after China slapped reciprocal tariffs on U.S. imports, putting commodities in the crossfire of an escalating trade war.

Included in China’s 128-item hit list are steel products, ethanol, almonds, fresh and dried fruits, and ginseng. The world’s biggest pork producer, consumer and importer is also planning a 25 percent tax on U.S. imports of the meat. June hog futures in Chicago declined to the lowest since the contract started trading in December 2016.

China Hits Back on Trump Tariffs as Europe Off Hook for Now

While Beijing has yet to target U.S. soybeans, speculation mounted that the oilseed could be next with Brazil headed for a second straight record harvest. That would be a huge blow to U.S. farmers, as American exports to the Asian country are worth about $14 billion annually. China is the world’s biggest buyer of the commodity, used to make animal feed, cooking oil and biofuel.

“The market fears a bigger, broader range of tariffs will be imposed by China,” Bill Lapp, the president of Advanced Economic Solutions in Omaha, Nebraska, said in a telephone interview. “Brazil is harvesting a record crop, so they have options in the next few months to wait and see what happens when U.S. harvesting gets started in September.”

Soybean futures for May delivery fell as much as 2 percent to $10.0925 a bushel on the Chicago Board of Trade, the lowest for the contract since Feb. 12. The price settled down 0.1 percent at $10.2825 as soybean meal jumped the most in five weeks amid severe drought in Argentina, the world’s top exporter of the livestock feed.

Argentina Soy Crop Estimate Slashed to 39.5M Tons: Exchange

Hog futures for June settlement fell 1.8 percent to 74.15 cents a pound on the Chicago Mercantile Exchange. Earlier, the price touched a record 73.225 cents. This week, the price plunged 6.3 percent, the most ever.

Ethanol futures for April delivery fell 2 percent to $1.451 a gallon, the lowest since Feb. 13, because of a potential Chinese tariff.

©2018 Bloomberg L.P.

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