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Soybean prices sunk to a 10-year low after the trade war escalated and left little hope that China — the world's biggest soybean importer —would resume buying U.S. soybeans.
Why it matters: Soybean farmers are once again at the center of a heightened trade war — targeted strategically by China. Some fear the damage may be irreversible. "We spent 40 years developing this trade relationship with China and in one fell swoop, it was all taken away," Bret Davis, a fourth-generation soybean farmer, tells Axios.
The big picture: The trade war is not just hitting the stock market. The commodity market has also been roiled — with prices for wheat, corn, pork and cotton falling — because of oversupply and flooding, which has exacerbated the trade war pain and caused sharp drops in farm income and increased bankruptcies.
- "We have to borrow money to put out our crop and the way it looks right now, it's going to be difficult to pay that money back," Davis, who runs a 3,500-acre farm Ohio, (a top soybean exporting state) tells Axios.
- Soybean farmers — who have depended on China for big soybean purchases for years — have fared the worst, as China purchases from the likes of Brazil instead. U.S. soybean shipments to China dropped to a 16-year low in 2018.
The bottom line: President Trump said the government was planning a second round of farm aid since the trade war began, worth $15 billion.
- But Joe Brusuelas, an economist at consulting firm RSM U.S., warns "it may be difficult to repair damaged trade connections," causing prolonged pain beyond repair, as Brazil ups its soybean production thanks to more demand from China.