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Soy sinks to decade low as US-China trade war escalates
[CHICAGO] US soya bean futures sank to their lowest prices in more than a decade on Friday as US President Donald Trump said he was in no hurry to sign a deal to end the trade war with Beijing, a dispute that has slashed American exports of the oilseed to China.
Wheat futures dropped to their lowest price since January 2018 at the Chicago Board of Trade (CBOT), and corn futures hit their lowest price since last September.
Trump's statement stoked concerns that the US-China trade war will drag on, limiting US agricultural exports. China is expected to retaliate against the United States for increasing its tariffs on US$200 billion in Chinese goods to 25 per cent from 10 per cent early on Friday.
US farmers had been hoping for a deal that would accelerate commodity purchases by China and help reduce massive stockpiles of American soy.
The U.S. Department of Agriculture (USDA) on Friday forecast bigger-than-expected domestic supplies of soya beans, corn and wheat, further pressuring the markets.
The USDA is not factoring a resolution to the trade war into its projections, said Dan Cekander, president of DC Analysis.
"They have no idea when there will be an actual agreement and you continue to trade it as if there is not," he said.
At the CBOT, the most actively traded July soya bean contract closed down 0.6 per cent at US$8.09-1/4 a bushel. The contract's session low of US$8.06-1/4 was the lowest since December 2008.
China is the world's top soya bean importer. Until the trade war, it bought US$12 billion worth of the crop from US farmers each year. However, American shipments slowed after Beijing slapped a 25 per cent tariff on US soya beans last July as part of the trade war between the world's two largest economies.
U.S. Agriculture Secretary Sonny Perdue said on Friday that Trump had asked him to create a plan to help American farmers cope with the heavy impact of the U.S.-China trade war on agriculture.
US soy shipments have suffered further this year as an outbreak of the fatal African swine fever hog disease in China has ravaged the world's largest pig herd, curbing demand for soya beans for use in animal feed.
"Price support is badly needed," said Terry Reilly, senior commodity analyst for Futures International.
CBOT wheat ended down 1.2 per cent at US$4.24-3/4, while corn fell 0.9 per cent to US$3.51-3/4 a bushel.