EVANSVILLE, Ind., Sept. 13 (UPI) — Soy and pork prices jumped Friday after China announced it would exclude those commodities from its latest round of tariff escalations, but farmers say it is too soon to celebrate.
High existing retaliatory tariffs remain on both soy and pork going into China. And this is not the first time China has extended an olive branch, raising hopes of a resolution to the trade dispute with the United States that began last summer.
“By this point, we’re 18 months in,” said Blake Hurst, president of the Missouri Farm Bureau, who grows corn and soybeans. “It’s become impossible for any farmer to know what is going on. I have no idea how this will impact the market. There is just total confusion.”
Still, the futures market responded immediately to China’s announcement. Soybean prices rose by more than 5 cents per bushel Friday afternoon, and pork was up more than 2.5 cents per pound, according to the Chicago Mercantile Exchange.
“This is a most welcome development,” David Herring, of North Carolina, president of the National Pork Producers Council, said in a statement. “We are hopeful that this apparent gesture of goodwill by China leads not only to more sales of U.S. pork, but that it contributes to a resolution of U.S.-China trade restrictions.”
But industry experts were quick to caution that this rebound might be short-lived. Everything rides on the outcome of upcoming trade talks scheduled for early October.
“This is very much a step in the right direction,” said Todd Davis, a professor of agricultural economics at the University of Kentucky. “But right now, it all comes down to if that meeting goes well.”
A number of agricultural industries have suffered in the prolonged trade war.
The tariffs are costing hog producers during a time when they could be selling unprecedented amounts of pork to China, Herring said. The African swine fever outbreak in that country will wipe out an estimated 30 to 50 percent of its hogs.
But the soybean industry was hit hardest. Roughly 30 percent of all soybeans grown in the United States went to China before the retaliatory tariffs were imposed in July. With that market essentially cut off, American soy prices plummeted and farmers were left with millions of bushels of beans that had nowhere to go.
China’s announcement was not the only news that helped bolster soy prices this week, said Arlan Suderman, the chief commodities economist at INTL FCStone, which provides commodities market analysis. The price also rose after the U.S. Department of Agriculture on Thursday predicted a lower soybean yield for 2019.
A small soybean harvest this fall will help prices, Suderman said.
“When you combine that with a possible trade deal that would have soybeans going to China again, we could go from a record surplus to a shortage of soybeans,” Suderman said. “That is not a prediction on my part, but it is the risks that the market is weighing.”
Still, experts agree that little will change for either commodity until the United States and China reach a truce.
“With the combination of tweets, statements, disagreements and promises that China really is going to buy soybeans and pork this time, uncertainty kind of reigns,” Hurst said.