Soybean prices near 10-year low after Trump's tariff threat to China

EVANSVILLE, Ind., May 8 (UPI) -- Soybean prices are nearing their lowest level in more than a decade following a series of tweets from President Donald Trump that threatened to increase tariffs on hundreds of billions of dollars on Chinese imports if a trade deal is not reached by Friday.

The threats came Sunday evening, following months of trade negotiations between the two countries.

"There was some optimism that we could get a trade deal put together," said Al Kluis, the managing director of Kluis Commodity Advisors in Wayzata, Minn. "Then, all of a sudden, instead of a deal, it was a threat to add more tariffs. It was a bombshell, and prices sharply lowered."

They have not recovered much, and experts say they are unlikely to do so until a trade deal is reached.

Following the tweets, the price for May soybean futures dropped from about $8.30 per bushel Sunday to $8.18 Monday. They bounced up slightly by Wednesday, opening at $8.19, according to the Chicago Mercantile Exchange.

Those prices are nearing a decade low. Prices last dropped under $8 per bushel in December 2008. Since then, they have generally stayed about $9 per bushel, having topped out at more than $17 in 2012. A year ago, they were around $10.33 a bushel.

Futures fell sharply after China imposed a 25 percent retaliatory tariff on American beans in July. For farmers, that means beans were selling for 10 to 20 percent below the cost of production, Kluis said.

"Soybeans really need a deal with China to have much hope of increasing at all," said Jack Scoville, a market analyst for The PRICE Futures Group. in Chicago.

Without such a deal, prices may drop further this summer and fall as a new crop of beans nears harvest time. Conversely, a trade deal could bring prices back up to a profitable level, analysts say.

"You tell me what's going to happen at the end of the week and I'll give you a better answer," Scoville said.

A Chinese delegation led by Vice Premier Liu He is expected to follow through on plans to visit the United States this week despite the tariff threats.