President Trump says “it’s certainly an option” to impose additional tariffs on China, a step that could end hopes of large U.S. farm exports to the Asian rival. A resumption of trade hostilities could mean larger U.S. soybean carry-over stocks this Sept. 1 and in fall 2021, possibly 500 million bushels each year, said economist Todd Hubbs of the University of Illinois on Monday.
Stocks of 500 million bushels would be the third-largest ever at a time when USDA has projected that larger exports would quickly drain a stockpile that was a record 909 million bushels at the start of this marketing year. “A collapse of the ‘phase one’ trade deal looks politically feasible,” wrote Hubbs at the farmdoc Daily blog. “If the U.S. and China rekindle the trade war, lower export totals, growth in ending stocks, and limits on soybean price potential face producers.”
Trump raised the possibility of new tariffs on China on Friday, as retaliation for the coronavirus pandemic.
Before the trade war, one of every three bushels of U.S. soybeans were exported to China. Since then, U.S. sales have shrunk and China increased its reliance on South America as a supplier. Brazilian soybean exports were a record 16.3 million tonnes, or nearly 600 million bushels, in April, aided by a bumper crop and advantageous exchange rates, reported Reuters.