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Trump's Handouts Won't Be Enough to Save New Lows




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The price of soybeans has plummeted over the past year since Trump started putting tariffs on Chinese products and China retaliated. The USDA estimates that the average bushel price falls from $ 9.33 in 201

7 to $ 8.60 last year. At 4.54 billion bushels that was a $ 3.3 billion impact to soybean farmers. However, the shortfall should be worse this year since last year farmers were able to sell their crops at $ 10 per bushel .

The chart shows below shows with a per bushel price in the low $ 8 area, unless prices turn up soon 2019 will be a disastrous year for soybean farmers.

There is a recipe for bankruptcies. There are several other factors that are affecting farmers including heavy rains and floods keeping them from planting on a timely basis (helps per bushel price but can cause total income) or in swine flu outbreak in China, which has led to the killing of millions of pigs that would consume soybeans (soybean prices). However, the main contributor seems to be the dramatically reduced demand from China.

Megan Nelson from the Farm Bureau estimates that the soybean crop is only 9% planted as of mid-May down 20 percentage points from the five-year average of 29% and 23 percentage points lower than last year. Soybean plantings ” data-height=”457″ data-width=”738″>

Soybean plantings

Soybean plantings ” data-height=”457″ data-width=”738″>

Soybeans are America's second largest cash crop

US soybean farmers grew over 4 billion bushels over the past three years with 2018 the largest production at 4.54 billion. To provide some perspective on how important soybeans are to U.S. it is the second largest cash crop in the country and accounted for 27% of total crop value grown in the U.S. per the USDA. The four largest crops in 2018 out of $ 143.6 billion were:

Corn & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; ; $ 17.0 billion

Wheat & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; $ 9.7 billion

Farmers are able to rotate and change how many acres or soybeans they plant. However, there is an overall constraint that besides corn, there are plenty large markets of other crops to make up a large monetary shortfall. Soybean production ” data-height=”664″ data-width=”939″>

Soybean production

USDA

consumers and corporations

President Trump mistakenly insists that the tariffs on Chinese goods are paid for the Chinese. While a portion, and probably a small portion, is paid by Chinese companies if they are lower prices to U.S. Buyers to help mitigate the impact from tariffs, they are actually paid by the companies that are importing the goods. The companies then have lower margins or pass along some of the tariff costs via higher prices to their buyers, many of which are consumers. Overall this is a tax on the U.S. economy.

Just last week there was a $ 16 billion relief package for farmers passed and signed by Trump. However, this may not make up for all revenue and costs created by the tariffs. It is also a stopgap measure. It does not help the long-term issues of lower prices, which peaked at $ 17 per bushel in 2013, or unintended consequence of the Chinese increasing their soybean production.

Chinese market may never return

Probably the biggest long-term issue that Trump may have created using tariffs to negotiate is that it has gotten the Chinese government to focus on how dependent the country has become on US farm products. Even when a trade deal is reached the market for U.S. Hu Xijin is the Editor-in-Chief of Chinese and English editions of the Global Times. He is a proficient tweeter with many of them responding to Trump and his policies. If you want to get a perspective (and posturing) of the Chinese government, he is someone you should follow.

Hu published this tweet on May 15 that talks about a Chinese farmer who planted all of his 100 acres or 247 acres with soybeans. One Chinese farmer wins impact overall but this is the type of shift, which will probably be incentivized by the government that could have serious long-term implications for U.S. farmers

Hu also believes that the two countries will reach a trade agreement but that it won't be anytime soon. He has had multiple tweets along these lines.

There is a lot of posturing with these tweets, but given the public nature Trump has based his negotiations on, neither country can be seen as giving

Pat Sheldon, a corn and soybean farmer from Percival, Iowa, who may have lost $ 350,000 of stored corn and soybeans in the floods. March 21, 2019
(Annie Gowen / The Washington Post via Getty Images)

The Washington Post / Getty Images

The price of soybeans has plummeted over the past year since Trump started putting tariffs on Chinese products and China retaliated. The USDA estimates that the average bushel price falls from $ 9.33 in 2017 to $ 8.60 last year. At 4.54 billion bushels that was a $ 3.3 billion impact to soybean farmers. However, the shortfall should be worse this year since last year farmers were able to sell their crops at $ 10 per bushel.

The chart shows below shows with a per bushel price in the low $ 8 area, unless prices turn up soon 2019 will be a disastrous year for soybean farmers.

There is a recipe for bankruptcies. There are several other factors that are affecting farmers including heavy rains and floods keeping them from planting on a timely basis (helps per bushel price but can cause total income) or in swine flu outbreak in China, which has led to the killing of millions of pigs that would consume soybeans (soybean prices). However, the main contributor seems to be the dramatically reduced demand from China.

Megan Nelson from the Farm Bureau estimates that the soybean crop is only 9% planted as of mid-May, down 20 percentage points from the five-year average of 29% and 23 percentage points lower than last year. Soybean plantings ” data-height=”457″ data-width=”738″/>

Soybean plantings

Soybeans plantings

Soybeans are America's second largest cash crop

US soybean farmers grew over 4 billion bushels over the past three years with 2018 the largest production at 4.54 billion. To provide some perspective on how important soybeans are to U.S. it is the second largest cash crop in the country and accounted for 27% of total crop value grown in the U.S. per the USDA. The $ 4 billion crops in 2018 out of $ 143.6 billion were:

Corn $ 51.5 billion

Soybeans $ 39.1 billion

Hay $ 17.0 billion

Wheat $ 9.7 billion

Farmers are able to rotate and change how many acres or soybeans they plant. However, there is an overall constraint that besides corn, there are plenty large markets of other crops to make up a large monetary shortfall. Soybean production ” data-height=”664″ data-width=”939″/>

Soybean production

USDA

consumers and corporations

President Trump mistakenly insists that the tariffs on Chinese goods are paid for the Chinese. While a portion, and probably a small portion, is paid by Chinese companies if they are lower prices to U.S. Buyers to help mitigate the impact from tariffs, they are actually paid by the companies that are importing the goods. The companies then have lower margins or pass along some of the tariff costs via higher prices to their buyers, many of which are consumers. Overall this is a tax on the U.S. economy.

Just last week there was a $ 16 billion relief package for farmers passed and signed by Trump. However, this may not make up for the lost revenue and costs created by the tariffs. It is also a stopgap measure. It does not help the long-term issues of lower prices, which peaked at $ 17 per bushel in 2013, or unintended consequence of the Chinese increasing their soybean production.

Chinese market may never return

Probably the biggest long-term issue that Trump may have created using tariffs to negotiate is that it has gotten the Chinese government to focus on how dependent the country has become on US farm products. Even when a trade deal is reached the market for U.S. Hu Xijin is the Editor-in-Chief of Chinese and English editions of the Global Times. He is a proficient tweeter with many of them responding to Trump and his policies. If you want to get a perspective (and posturing) of the Chinese government, he is someone you should follow.

Hu published this tweet on May 15 that talks about a Chinese farmer who planted all of his 100 acres or 247 acres with soybeans. One Chinese farmer wins impact overall but this is the type of shift, which will probably be incentivized by the government that could have serious long-term implications for U.S. farmers

Hu also believes that the two countries will reach a trade agreement but that it won't be anytime soon. He has had multiple tweets along these lines.

There is a lot of posturing with these tweets, but given the public nature Trump has based his negotiations on, neither country can be seen as giving


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