Yesterday I noted that the dubious Noem poll suggests anti-Trumpers aligning with Marty Jackley. That effect could swell if Trump keeps costing South Dakota farmers real money, as South Dakota Soybean Association president Jerry Schmitz calculates:
Schmitz explains that South Dakota’s more than 11,000 soybean growers feel the pain of this market decline. “That 40 cent drop results in an overnight income loss of $15,000 to $20,000 to the average South Dakota soybean farmer at a time when farm income has already dropped to 50 percent of what it was five years ago” [South Dakota Soybean Association, press release, 2018.04.04].
And Schmitz isn’t buying the “Don’t Blame Trump, Blame China” ploy:
He adds, that there is still time to reverse the damage. The Trump Administration can still deliver for farmers by withdrawing the tariffs that caused this retaliation. “China has said that its 25 percent tariff will only go into effect based on the course of action the administration takes,” Schmitz said [SDSA, 2018.04.04].
Schmitz tells the Capital Journal that every third South Dakota bean goes to China. He says a Trump trade war could be as hard on South Dakota agriculture as the 1980 grain embargo against the Soviet Union:
Using food as a weapon in international affairs went down as a black mark in most people’s books on Carter, who lost the 1980 election to Ronald Reagan, for that and other reasons.
Grain prices to American farmers fell heavily and it changed the world market for decades, Schmitz said.
“It was the same situation,” he said. “The farm economy was going down. It started the same way: just rhetoric that went back and forth.”
But it got to the point where neither side would back down, he said.
It resulted in effects felt still today, he said.
Needing a new source of livestock feed and human food, the Soviet Union turned to Asia and South America and its huge demand sparked the start of farming on a massive modern scale in Brazil and Argentina, Schmitz said.
Still today, Brazil’s soybean production is a main rival for U.S. farmers, he said. “Ever since they have been competitors” [Stephen Lee, “South Dakota Soybean Farmer Urges President to Keep China Markets Open to American Crops,” Pierre Capital Journal, 2018.04.09].
Farmers aren’t fooled: if they lose buyers due to tariffs, they’ll blame the impulsive egomaniac in the White House. Even if those tariffs don’t kick in before the primary, cautious Republican farmers may look ahead and say that the less their gubernatorial nominee is tainted by association with Trump, the better, and that means picking Marty Jackley over Kristi Noem on June 5.
Couple of points on this, Cory. Despite what Carter defenders here were saying about JC’s grain embargo against the Soviets, Schmitz gives an accurate rundown of the negative and permanent aftereffects created by a President weaponizing food, in particular its creation of a world-class exporter and competitor, Brazil. As to the current situation, I note that USDA just reported a sizable sale of American soybeans to European interests because Brazilian beans are at a premium (my view: they’ve been selling them to Mexico and China as recent trade tensions developed). This is sort of good newsy because it shows that a world market still needs product, China or no China. The unfortunate part is that Trump’s efforts have resulted in Brazilian soybean farmers getting better prices for their crops than Americans are receiving. As with Carter’s ill-advised policy, Trump’s efforts are helping our rival compete more effectively on world markets.
Here’s that Reuters piece on the soybean sale to Europe that I referenced and related back to our Jimmy Carter discussion a few days ago. https://www.reuters.com/article/us-usa-trade-china-soybeans/as-u-s-and-china-trade-tariff-barbs-others-scoop-up-u-s-soybeans-idUSKBN1HF0FQ
Calm down. Yesterday, 04/09/18, the soybean market closed a bit higher than it was
the day before China announced its tariff intentions. As Tsitrian points out, we are in a world market. If Brazil sells a whole lot of soybeans to China, it may not be able to
adequately service all of its other customers, and the US may get some of that
business. Don’t get me wrong. A tariff will hurt. But it’s not the disaster that some
would have us believe. I’m not defending Trump, I consider him a loose canon.
While I’m not knowledgeable enough to explain all the intricacies of the grain
markets, I just don’t think all this hysteria is justified.
Very interesting, John. Long-term, if the tariffs kick in, can we tell where Brazilian bean prices would settle, above or below U.S. prices?
I wonder: in general, are there minimum criteria for putting national security interests above trade interests? Carter had no economic motive, right? The 1980 grain embargo was just about punishing Russia for entering Afghanistan, right?
Edwin, I don’t think I’m being hysterical. I don’t think Schmitz is, either. We’re expressing the same concern you are about a loose-cannon president causing unnecessary uncertainty and financial losses for South Dakota’s farmers.
Cory, as I write this, soybeans are up .10. The only farmers who lost money
are those few who panicked and sold on the day soybeans were down .40.
USDA’s WASDE (world supply and demand estimate) report comes out at
11:00 AM today. That’s the next uncertainty. There’s a lot of stuff that
I just read on CNN that China’s President said he would lower the the 25 per
cent tariff on foreign cars. Who knows how it’s all going to shake out.
Interesting. So what’s the wise business choice for a farmer getting ready to plant: soybeans, corn, some other crop, or sell the land and get out?
According to Bloombergs, Brazil has been drought stricken the past three years- https://www.bloomberg.com/news/articles/2018-04-09/u-s-corn-shipments-soar-to-a-record-amid-trade-concern-drought
Cory, what farmers should plant is a source of endless debate in the farm press,
those guys and gals have to write about something.
As a practical matter, most farmers, our farm included, are reluctant to
screw with their rotation. In our area the common rotation is approx. 1/2 corn
and 1/2 soybeans.
As for selling the land and getting out; most farmers who are doing alright
will farm until retirement age, (and sometimes longer if
health allows) if they have no heirs interested it taking over.
Otherwise, son, daughter, son-in-law, nephew, some family member will
We farm in SE North Dakota, north of Sisseton, SD, the farm headquarters
is one mile north of the North Dakota state line.
Have to go out to the farm now.
…out to the farm now? To do what, ride snowmobile? ;-)
I like the Buffett approach using Import Certificates (ICs) instead of targeting specific items or countries for tariffs. http://fortune.com/2016/04/29/warren-buffett-foreign-trade/
As a Carter defender, I find it interesting the idea of “weaponizing food”. Who is kidding who here? This is all about manipulating the markets for more insider trading. Case in point would be subsidized farming, not even a secret when you look at the last Farm Bill.
“Farm subsidies don’t lack for critics. Free-market conservatives and welfare state-defending liberals alike have called for deep cuts in these payments to farmers. After all, farmers, as a group, are wealthier than the average American. Why should they get tens of billions of dollars each year in federal aid?
Two years ago, when the most recent Farm Bill emerged from Congress, the measure’s authors proudly announced what sounded like bold cuts in these controversial programs. The Senate Agriculture Committee noted in a press release that the new law would eliminate one big subsidy altogether and save taxpayers a total of $23.3 billion over the following 10 years.
Those projected savings, it turns out, were a mirage. According new estimates for Farm Bill spending over the next few years released by the Congressional Budget Office, total government aid to farmers will swell to $23.9 billion in 2017.” https://www.npr.org/sections/thesalt/2016/02/01/465132866/farm-subsidies-persist-and-grow-despite-talk-of-reform
So, it is really really a stretch to say that China is “weaponizing” food products from poor farmers, what we are actually seeing is manipulating food products with some going to the link provided by John T., as “undisclosed purchasers” (who could that be?). There has been no tariff’s implemented, only talk of them. We have seen the stock market rise with huge leaps and fall the same way, hours apart. Mr. Arndt notes that beans have gained .10 today. He is right that those guys who sold and lost a billion through contract obligations, will now have to get it back from something like asking for it. Works every time, don’t worry.
In the meantime, Russia still is involved with the manipulation of the American election process. While trump sits on his tweeter to do whatever he can to steer law enforcement away from his door, farmers will do as farmers do. They will plant crops to make the guaranteed money they always get, one way or another.
Carter had been given the extended recession that Nixon had received from Johnson. The cause rests clearly on the costs of the Vietnam War and the Great Society changes as well as monetary ineptness that was inherited as well. We are seeing the same thing with the wars we have been in since 2001 with the trillions in debt.
The collapse of the ag industry had to do with 21% interest rates more so than an embargo that was able to still send grain to Russia via Romania and other ports. I remember the cost of fuel during those times that many think were caused by a grain embargo. Hard to borrow enough money to fuel your machinery when it is 21% and the cost of fuel is through the roof.
Soybeans and grain “CORRECTED-GRAINS-Soybeans climb on USDA data; wheat ends firm
11 Hours Ago
CHICAGO, April 10- U.S. soybean futures closed higher on Tuesday after the U.S. Department of Agriculture trimmed its forecast of U.S. 2017-18 soybean ending stocks in a monthly report, bucking trade expectations for an increase. Chicago Board of Trade May soybean futures settled up 3 cents at $10.50 a bushel after reaching $10.64”.
“UPDATE 1-Argentina buys most U.S. soy in 20 years after drought cuts crop
15 Hours Ago
CHICAGO/ BUENOS AIRES, April 10- Argentina booked its largest purchase of U.S. soybeans in 20 years on Tuesday after drought cut the harvest in the world’s third biggest soy producer, forcing crushers there to turn to imports. The surprise move pushed Chicago soybean futures to a one-month high, in the latest development to upend global soy trading after top buyer…
Argentina books largest U.S. soybean imports in 20 years, USDA says
18 Hours Ago
CHICAGO, April 10- Argentina has booked its largest import purchase of U.S. soybeans in 20 years, the U.S. Department of Agriculture said, amid a drought that has cut production in the world’s No. 3 soybean exporter and top supplier of soymeal and soyoil. The USDA on Tuesday confirmed the private sales of 120,000 tonnes of U.S. soybeans to Argentina”
Ag folks, put the crop in the ground. If it fails, the insurance will pay for it. If it succeeds, there will be a market for it. If you sell on contract and you loose, file for a re-ride. Just like in rodeo, you will get to come out of the chute once again, and just like in the past ask, for more in the Farm Bill, just don’t go calling it socialism.
There are no tariffs yet. No halt to trade. No change in trade. Much like all ya’lls worry about someone saying something racist at the state basketball you are doing the same here. There are no new tariffs. Nada, nope, ain’t happened. . . Prices go up and down every day just as the stock market does. Yo can’t attribute it to any one cause at this point until something actually happens.
Yep, you can attribute that to one cause and one cause only, Russia! Without Russian interference in our elections, there would not be trump or the cause of wild fluctuations in the markets.
Ya won’t be able to all lying Paul Ryan though, that dude is leaving the building to the polished mafia crooks and liars. Damn man, I was kind of hoping that he would get his arse handed to him by his voters…turns out he did. They don’t even want the stench.
Soybean growers unite. If it is good enough for former speaker of the United States House of Representatives, it should be your goal to get into a crop that is at least profitable. https://www.acreageholdings.com/news-release-board-of-advisors-appointment
Drag along Daugaard as well, governor Weld (another Republican) joins Boehner on the board.
Hey, OldSarg, maybe you’re right. Same as foreign policy: there’s no war with North Korea or Russia yet. No missiles fired. No change in radiation levels. How silly of us to worry about the President of the United States merely threatening to start such wars. When will we learn that Donald Trump has rendered the words of the President of the United States meaningless?
More fear mongering and not much critical discussion. China bought 9.3 M new today, EU picked up the slack , and Argentina’s crop is in the toilet so we sold lot’s to them. The market at least as good as if not better than the rest of the commodities.
Way to many variables that no one is talking about to be crying wolf before it sets foot on the property.