Young soybeans with standing water

China announced Aug. 23 that it will impose additional tariffs on $75 billion of U.S. goods in retaliation for President Donald Trump’s latest planned levies on Chinese imports. The measures include an added 5% tariff on soybeans and an extra 10% on American pork as of Sept. 1. Corn and cotton products were also on the list.

November soybean futures in Chicago fell as much as 0.9% after the news, reaching a two-week low. The contract had been trading higher earlier in the session. Cotton and hog futures both slumped. Corn was also down, although with China no longer a big player in U.S. corn, traders are more focused on Midwest crop development.

China, the world’s top soy importer, has already had a 25% tariff on the U.S. crop and has curbed purchases of American farm products for months as trade tensions simmer between the nations.

“As far as supply and demand, it means nothing because buyers weren’t buying anyways,” said Arlan Suderman, chief commodities economist at INTL FCStone. “It’s more about making headlines than it is actually changing the amount of soybeans that flow between the U.S. and China.”

Tensions have been increasing in the American farm community in recent weeks. Farmers leveled criticism at Agriculture Secretary Sonny Perdue at a fair in Minnesota earlier this month over Trump’s yearlong trade war with China, which has eroded demand for agricultural products and pressured already low prices. Top Trump administration officials also met this week to consider options for quelling a backlash in the Midwest over recent biofuel policy moves.

The spat between the U.S. and China has spurred added demand for South American soybeans. Export prices at Brazil’s Paranagua port are widening versus U.S. Gulf supply, Commodity3 data show.

U.S. farmers will begin harvesting this year’s soybean crops starting in September. Stockpiles were expected to balloon to an all-time high in the season that ends this month as American export demand dims.

Most crop futures recovered some ground after the initial sell-off spurred by the trade-war headlines.

“It was bearish to start and with outside markets also adding a negative undertone into the ags,” Terry Reilly, senior commodity analyst at Futures International, said by telephone. “We’re seeing a little bit of a rebound as traders kind of access and take a step back and realize that nothing fundamentally has changed.”

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