One of the world’s largest grain companies warned of a “skinny export season” for U.S. soybeans and an intergovernmental body said the United States might need to seek new markets for its cotton due to President Trump’s trade war with China. Meanwhile, the Trump administration threatened on Wednesday to put 25-percent tariffs on $200 billion worth of Chinese imports as leverage for reform.
China retaliated with equivalent tariffs on U.S. goods, including farm exports, when the White House imposed duties on washing machines and solar panels, steel and aluminum, and high-tech products from China.
“The Trump administration continues to urge China to stop its unfair practices, open its market and engage in true market competition,” said U.S. trade representative Robert Lighthizer. To gain “additional options” against China, the administration will consider 25-percent tariffs, rather than the originally proposed 10 percent rate, on $200 billion in goods from China. “Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers and businesses,” he said.
“China and others—remember this—have targeted our farmers. Not good. Not nice,” Trump said at a rally in Florida on Tuesday. “And you know what our farmers are saying? ‘It’s OK. We can take it.'”
In a monthly assessment, the International Cotton Advisory Committee forecast record cotton consumption in the year ahead, although the U.S.-China tariff war caused a bobble in prices and could disrupt trade flows. The USDA lowered its forecast of U.S. cotton exports by 3 percent, or 500,000 bales, due to smaller supplies and increased foreign competition.
“Sour trade relations between China and the United States show little signs of improving, and could even deteriorate further in the near term, potentially causing major shifts in global trade patterns,” said the ICAC. “China’s 25 percent premium could prompt the United States, the world’s largest exporter, to seek new markets for its fiber, while other major exporters such as Brazil are expected to fill the void by increasing their shipments to China, the world’s largest importer.”
The chief executive of grain exporter Bunge told investors, “[I]f things remain as they are now, which is what we are assuming in our forecast, it’s going to be a skinny export season both off the West Coast and in New Orleans,” reported AgriCensus, the market news agency. Overall, U.S. soybean exports will be down markedly in the year ahead and stockpiles will grow, said Soren Schroeder of Bunge.
In mid-July, the USDA forecast an 11-percent drop in soybean exports and a 50-percent increase on so-called carryover stocks.