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President Donald Trump says the United States and China were close to a trade agreement, before China tried to negotiate again. This happens hours before a Chinese delegation is expected at the White House. (May 9)
AP

Fighting against the rain and cold, collapsing trade negotiations with China and commodity markets in crisis, Brent Renner, a farmer from northern Iowa, says it's a struggle to feel optimistic about the corn and soybeans he's sowing.

"It's a physical and mental challenge," said Renner, a 43-year-old woman who works on farms near Klemme, a town of about 500 people west of Clear Lake.

"Many of us think that it can not be worse, that it can only go up from here, but that probably is not a safe bet," he said.

According to experts, the outlook for better prices is easing, with record supplies, sweep of the disease by China's herd of pigs and reduced demand for soybeans, and hope for a new trade agreement between the United States and China It is fading.

Early Friday, President Donald Trump raised tariffs to 25% from 10% to $ 200 billion in Chinese products.

And the president is threatening to impose tariffs on another $ 325 billion in Chinese imports, which cover everything China sells to the United States.

Iowa farmers are increasingly concerned about the upcoming planting season as the US trade war with China escalates, threatening to reduce already low commodity prices. (Photo: AP)

"Farmers, especially soy producers, have been the spearhead when it comes to Chinese reprisals, and I'm not sure they can take much more," said Kirk Leeds, executive director of the Iowa Soybean Association.

The escalation of tariffs "undermines any remaining optimism," Leeds said. "That's the most devastating thing about this."

"There are some vendors who think we could see $ 6 soybeans," he said, adding that he expects prices will not go that far.

Soy for delivery in May was trading around $ 8 per bushel on the Chicago Mercantile Exchange on Friday.

Negotiations continue with China, but the country says it will retaliate, equaling US tariffs.

President Donald Trump tweeted Friday morning that farmers in the United States would be better off, and that the government could possibly buy $ 15 billion in goods to provide humanitarian assistance to countries in need.

US Agriculture Secretary Sonny Perdue tweeted Friday that the president ordered the agency to "work on a plan quickly."

In Iowa last month, Perdue said the government had no plans to provide another round of assistance to farmers.

China bought about $ 24 billion in US agricultural goods in 2017, including $ 14 billion in soy purchases. Last year, China's total agricultural purchases were reduced to about 9,200 million dollars.

► How can commercial war with China strike you? Higher prices, loss of jobs and falling stock.

Plus Iowa farmers face problems getting financing as planting season approaches

The federal government is already providing up to $ 10 billion in direct assistance to producers of soybeans, corn, pork, dairy and others to compensate for the damages caused by US trade disputes with China, Mexico, Canada and other countries.

He is spending around $ 1.2 billion to buy food that will go to schools, food pantries and other programs.

Tim Bardole, a Rippey farmer, said he understands that the United States needs a stronger trade agreement with China, especially to protect intellectual property.

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"An agreement that is fair to both countries is really the light at the end of the tunnel that I hope for," said Bardole, president-elect of the board of the Iowa Soybean Association.

"But there is no doubt that agriculture is suffering as things are," he said.

President Trump's tweet on Sunday, stating that US tariffs in China would rise, cost Bardole around $ 25,000 in stored grains due to falling prices.

Prices of corn and soybeans have fallen by 10% since April. It is estimated that this year's agricultural income in the United States will be $ 69.4 billion, approximately 45% below the 2013 maximum.

"Many producers have serious financial problems, how long we can survive and manage them, I do not know," said Bardole.

"The time has come, everyone is crouching and trying to cut costs and working to overcome them," he said.

In addition to the difficult trade talks with China, farmers are waiting for Congress to ratify a new agreement with Canada and Mexico, the second and third largest trading partner in the United States. China is the largest trading partner of the country.

Dermot Hayes, an agricultural economist at Iowa State University, said that tariffs have made agricultural products from the United States more expensive than the products of their competitors.

"It's hard to damage US agriculture more than it has already done because current duties are already prohibitive," Hayes said.

Joe Kerns, of Kerns and Associates, an agricultural risk management firm of Ames, said that trade agreements are important, but that the highly contagious African swine fever that ravages China is the most important factor influencing soy prices. .

The disease is fatal for pigs, but it does not present known risks for human health or for food safety.

"Dead pigs do not eat much," Kerns said, noting that China has about half of the world's pig population.

Self-reproduction

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Prices of corn and soybeans could be depressed another three years before demand and supply become more balanced, Kerns said.

"We do not have a light at the end of the tunnel for corn and soybean prices," Kerns said. "We have more difficult times ahead, more difficult times ahead."

He sees the American producers of pork, chicken, beef and eggs who benefit from China's efforts to replace lost protein production.

Hayes said prices for pork in the United States have recovered since March, while Canada and other countries have sought to replenish supplies that have gone to China.

"It's probably the only bright spot" in US agriculture, he said. "We get some benefits from fill supplies, it's probably not 100%, but it's positive."

But it will take time to eat through large supplies of grain from the United States, which will grow, according to government projections published on Friday.

"We expect a big adjustment," Kerns said, adding that new trade agreements are unlikely to address the problem of oversupply significantly.

And that means that farmers, landowners and manufacturers of seeds, machines and chemicals will have to adapt to the lower prices for corn, soy and other commodities, he said.

The cost of producing a crop, from renting the land to buying seeds, fertilizers and other inputs, has slowed down, despite the fact that incomes have plummeted.

Kerns said news of an agreement could provide a short price increase that could sweeten the final balance of farmers.

But the peak will not last long, he said. "It does not change the foundations in the long term."

Renner and other farmers are considering changing the hectares of soybeans to corn, which offers greater earning potential.

But the fields soaked by rain in Iowa this spring could carry that idea, leading to soybeans, which can be planted later in the spring without yield losses.

And as their crops grow, Renner said he expects trade agreements or adverse weather to help boost prices.

"I hope things change quickly," he said. "It could break many people … There's no other way to see it, it's ugly."

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