As fallout from the ongoing tariff retaliation battle between the U.S. and China continues to evolve, the news isn’t getting any better for Michigan farmers, especially soybean producers.
Unfortunately, it will likely get worse, following the announcement this week of an additional $200 billion in tariffs on Chinese imports by the Trump Administration.
According to Michigan Farm Bureau Field Crops Specialist Kate Thiel, U.S. export figures prior to this week suggest that American soybean producers are already feeling the pain with cancellations of U.S. soybean orders from China skyrocketing - an ominous sign of things to come for other U.S. agricultural exports.
“The latest USDA export sales data released on July 6, covering trade through June 28, reveals that total lost 2017/2018 U.S. soybean sales have now exceeded 5 million metric tons,” Thiel said. “That’s more than 2 million metric tons higher than cancellations the same point in the 2016/2017 marketing year and more than 1 million metric tons higher than the level of cancellations throughout the entire 2016/2017 marketing year.”
American Farm Bureau Federation Economist Veronica Nigh said in the unlikely event that no more cancellations were to occur, and the U.S. ships the remaining 772 million metric tons in outstanding sales to China, U.S. soybean sales for the full 2017/2018 marketing year will still be more than 8.5 million metric tons below 2016/2017, a decline of more than 23 percent.
Ironically, said Thiel, the latest USDA planting report shows Michigan farmers devoted 2.3 million acres to soybean production, exceeding corn acres planted for grain at 1.85 million acres, making the economic impact of lost soybean exports that much more financially painful.
“The late planting season, due to excessive rainfall, motivated many Michigan farmers to switch tillable acres from corn production to more soybeans acres than originally planned,” Thiel said. “So when you talk about the perfect financial storm, many Michigan farmers are rightly concerned that the $250 billion high-stakes poker game of tariff retaliation has to stop and alternative trade negotiation tactics pursued sooner rather than later.”
Thiel estimates that new crop values for Michigan, corn, soybean and wheat producers, based on trend yields and planted acreage reports have declined a collective $520,000,000 since mid-May contract highs on the Chicago Board of Trade as of July 5, one day prior to the announcement of the additional $200 billion in new tariffs.