By Alayna DeMartini
The trade war has brought down prices of soybeans and corn, though yields on both crops are expected to be higher than last year's.
Weeks before Ohio corn and soybean farmers put seed in the ground this past spring, the threat of a trade war loomed.
Now both crops are thriving amid a trade war that’s likely bringing down prices of the two commodities.
“I hear about it every day. There’s great concern out in the countryside,” said Harold Watters, an Ohio State University Extension agronomy field specialist. OSU Extension is the outreach arm of the College of Food, Agricultural, and Environmental Sciences (CFAES) at The Ohio State University.
“Farmers are not quite sure how this will get fixed.”
Yesterday (July 24), the U.S. Department of Agriculture (USDA) unveiled a $12 billion package of emergency aid for farmers, including producers of soybeans, dairy and hogs, whose incomes are being threatened by the trade war. The aid includes direct payments to those farmers along with funding for developing new export markets and for government food purchases.
Since March, when the Trump administration announced a 25 percent tariff on foreign steel and 10 percent on foreign aluminum purchases in the United States, countries have countered with tariffs on U.S. products, including soybeans, corn, pork and other agricultural products.
The price for corn has decreased 14 percent in the futures market since April, while soybean prices declined by 17 percent during the same period, according to the Chicago Mercantile Exchange. The futures market is the price offered to farmers today for their crop to be delivered at a specific time in the future, months or years later.
Tariffs on U.S. soybeans sold to China, the world’s largest consumer of soybeans, were a major blow for Ohio farmers. Soybeans are the state’s top agricultural export; last year, exports totaled $1.8 billion.
The added tax brings up the price of U.S. soybeans sold in China, which can deter the Chinese from buying the product, encourage them to produce more or lead them to buy soybeans from other countries.
While sales of U.S. soybeans and corn are expected to decline this year, yields are projected to be better than last year’s. The National Agricultural Statistics Service says 72 percent of the national crop is in good or excellent condition, which is 10 percent higher than at this time a year ago.
With the tariffs in place, if farmers can hold off selling their crop, they might benefit from a higher price in the future if prices rebound, said Ben Brown, manager of the farm management program in CFAES.
“Farms short on cash and without access to storage could be harmed the most because they might have to sell their crop in the current market,” Brown said. “Farms with higher cash flow can stick the crop in the bin and wait for a potential higher price.”
In Ohio, 42 percent of farmers were able to sign contracts selling this year’s crop before the downward swoop in prices, Brown said, citing results of a CFAES survey.
“But I know farmers who are now regretfully taking their corn out of the bin and selling it for $3 and change per bushel. In May, it could have gone for $4 a bushel,” Watters said.
Despite an expected decline in Chinese imports of corn and soybeans, other countries are partly making up the difference, importing U.S. soybeans at relatively low prices. Egypt has nearly tripled the amount of U.S. soybeans imports, according to data from the USDA. The Netherlands has increased soybean imports by 17 percent.
But for 2018, total U.S. soybean exports through July 5 were down by about 3 million metric tons compared to the total in 2017. Corn exports too were down by 2 million metric tons.