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Technology As soybean futures plunge, farmer says tariffs have 'devastated' the industry

04:35  11 august  2018
04:35  11 august  2018 Source:   cnbc.com

Dow is set to drop more than 350 points as Trump ratchets up pressure on China with more tariffs

  Dow is set to drop more than 350 points as Trump ratchets up pressure on China with more tariffs U.S. stock futures fell sharply on Tuesday after President Donald Trump's latest threat to China increased fears of an impending trade war between the world's largest economies.Dow Jones industrial average futures dropped 373 points, indicating a decline of 364.47 points at the open. S&P 500 and Nasdaq 100 futures, meanwhile, fell 30 points and 74.75 points, respectively.

The possibility of a record soybean harvest will only add to the woes of an industry already " devastated " by escalating trade tensions between the United States and China, Ohio soybean farmer Chris Gibbs told CNBC on Friday.

Related: A massive US farming industry fears China trade trouble. Tariffs would cause Bible to re-evaluate his planting strategy and Chinese tariffs "will have a devastating effect on every soybean farmer in America," American Soybean Association President John Heisdorffer said in a statement.

  As soybean futures plunge, farmer says tariffs have 'devastated' the industry © Provided by CNBC
  • The possibility of a record soybean harvest will only add to the woes of an industry already "devastated" by escalating U.S.-China trade tensions, says farmer Chris Gibbs.
  • Soybean futures plunging on Friday after a USDA report about the possibility of a large soybean harvest.
  • Gibbs says the agriculture community's fear with the trade war is that the U.S. will be seen as an unreliable supplier.

The possibility of a record soybean harvest will only add to the woes of an industry already "devastated" by escalating trade tensions between the United States and China, Ohio soybean farmer Chris Gibbs told CNBC on Friday.

Despite Beijing's threats, some American goods 'appear inevitable' for China

  Despite Beijing's threats, some American goods 'appear inevitable' for China Some American commodity products, like soybeans and liquefied natural gas, are poised to still find buyers in China even if trade tensions escalate.A wave of Chinese tariffs on U.S. goods is set to come into effect on July 6 as trade tensions between the two countries continue to intensify.

China’s February imports of U.S. sorghum plunged 24 percent from a year earlier, customs figures show. Soybean futures slid as much as 5 percent on Wednesday in response to China’s move. Illinois soybean farmer Lucas Strom said China’s tariffs confirmed his worst fears.

Soybean farmers , apple growers and auto workers are among the US workers bracing for fallout from a trade war between the United States and China. The US on Friday slapped tariffs on billion worth of Chinese imports to combat what is says are the country's unfair trade practices.

Earlier in the day, the U.S. Department of Agriculture predicted U.S. soybean production for the 2018-19 crop year would hit 4.586 billion bushels, topping market forecasts. The news sent soybean futures plunging on Friday, falling more than 4.5 percent. It was their worst day since the July low.

"The effect of the trade war has been very devastating on soybean farmers here. We've taken a 20 percent drop in price," Gibbs said on "Power Lunch."

"What we're seeing with market action today only exacerbates the fact that we have lost our No. 1 customer because of the trade wars."

The U.S. and China have been engaged in a tit-for-tat escalation of tariffs against one another. In July, President Donald Trump slapped 25 percent tariffs on $34 billion of Chinese imports. Beijing responded by imposing 25 percent duties on American exports, including soybeans.

US farmers could take a significant hit from Trump's tariffs

  US farmers could take a significant hit from Trump's tariffs As trade tensions continue, U.S. farmers are caught in the crossfire.That leaves U.S. farmers in the crossfire.

The Ministry of Commerce in Beijing said it will levy an additional 25% tariff on 106 U.S. products, including soybeans , automobiles, chemicals, aircraft, whisky and cigars. At the time of writing, the Dow Jones Industrial Average futures market was down 2.34%.

China’s planned retaliatory tariffs , which were unveiled in response to measures by the Trump administration, “will have a devastating effect on every soyabean farmer in America,” said John Heisdorffer, president of the American Soybean Association, which represents more than 300,000

In August, the U.S. Trade Representative's office released a finalized list of $16 billion worth of Chinese goods to be hit with tariffs, to take effect on Aug. 23. China responded by announcing a 25 percent charge on $16 billion worth of U.S. goods.

Trump has also threatened to impose broader tariffs on as much as $500 billion of Chinese goods.

Gibbs, who owns and operates 560 acres of farmland, said the agriculture community's fear is that its years of building up markets around the world could disappear overnight.

He pointed to history as a guide — specifically what happened in 1980, when then-President Jimmy Carter imposed a grain embargo on the Soviet Union after the country invaded Afghanistan. That resulted in other world markets looking for a different supplier since the U.S. was seen as unreliable, Gibbs said.

"This is the fear that we have out here in agriculture country, that we're going to become an unreliable supplier," he said.

— Reuters contributed to this report.

$12B bailout for U.S. soybean growers will come at Canada's expense, says Dresden farmer .
The U.S. government recently announced a $12 billion plan to assist farmers who have impacted by the trade dispute — something Phillip Shaw, an agricultural economist and Chatham-Kent soybean farmer, said is problematic for soybean farmers in southwestern Ontario. In early July, China placed a 25 per cent tariff on American soybeans — after the U.S. hiked tariffs on $34 billion worth of Chinese imports. Since then, farmers in Ontario have watched the global price of soybeans fall steadily. By mid-July, reports put the price of a bushel of soybeans down about $2 U.S.

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