The U.S. soybean industry is on edge again as relations with China have turned south.
The Trump administration is trying to get Beijing to commit to multi-year purchase agreements, The Wall Street Journal reported Friday, citing sources familiar with both sides of the matter. Those goods include U.S. soybeans, beef and poultry, the report said.
But Chinese officials have been reluctant to commit, the sources told the newspaper.
“We don’t expect these talks to be that fruitful,” John Ferguson, director of global forecasting at The Economist Intelligence Unit, told CNBC. “We expect the U.S. and China to move forward with the tariffs. For the U.S. agriculture sector, that means soybeans.”
A U.S. team is in Beijing for trade talks ahead of U.S. Commerce Secretary Wilbur Ross’ planned arrival in the city on Saturday. Members of the U.S. Department of Agriculture and other agencies are involved in the discussions with China, which in 2017 was the second-largest destination for U.S. agriculture exports, according to the USDA Foreign Agricultural Service.
In early April, China’s Ministry of Commerce put soybeans on its list of planned tariffs in retaliation against proposed U.S. tariffs on $50 billion worth of Chinese goods. After a pause in the trade dispute in late May, the Trump administration said Tuesday it would move forward with releasing a list of Chinese goods that will be subject to 25 percent tariffs.
“The Chinese side has confidence, capability and experience to defend the interests of our country and her people,” the Ministry of Commerce said in a statement Wednesday. “We urge the U.S. to act in the spirits of the joint statement.”
Hopes were lifted about two weeks ago when the U.S. and China said they “agreed on meaningful increases in United States agriculture and energy exports.” That week, soybean futures recovered from their lowest in more than a month to settle at their highest in three weeks.
Prices have since fallen about 3 percent and were trading little changed Friday afternoon near $10.22 a bushel.
On the other hand, shares of U.S. farm equipment manufacturer Deere climbed more than 2.5 percent amid broad stock market gains.
“We’re confused right now,” said Bret Davis, partner at Davis Farms in Ohio and a member of the governing board of the American Soybeans Association. I “hope it’s still a way to bring [Beijing] to the table, but still very anxious as a soybean farmer.”
In a report Thursday, the USDA Economic Research Service said that due to slower U.S. soybean exports to China, the agency expects overall exports of the crop will fall $100 million to $21.9 billion for fiscal year 2018.