Trump offers skewed view of farm trade
WASHINGTON (AP) — President Donald Trump is promoting a lopsided view of agricultural trade as he assails “bad (terrible) Trade Deals with other countries.” Agriculture is actually a strong point for U.S. commerce.
A look at his tweet Friday:
TRUMP: “Farmers have been on a downward trend for 15 years. The price of soybeans has fallen 50 percent since 5 years before the Election. A big reason is bad (terrible) Trade Deals with other countries. They put on massive Tariffs and Barriers. Canada charges 275 percent on Dairy. Farmers will WIN!”
THE FACTS: You wouldn’t know from the president’s rhetoric that the U.S. exports more agricultural products than it imports, running a $17.4 billion surplus with the world last year on that front. Trump has several times cited 15 years of trouble for U.S. farmers even as his Agriculture Department highlights the fact that U.S. exports of food products have grown “steadily over the last two decades.” The U.S. maintained a surplus in the latest monthly figures — $716 million in May.
As for soybeans, he is ignoring a big — and positive — reason why soybean prices fell in recent years to about $9.39 a bushel in 2017 from about $14 in 2012 and 2013: Farmers have been flooding the market with soybeans.
In fact, the Agriculture Department reported that a record 89 million acres of soybeans were harvested last year. That is about 13.3 million acres more than in 2013. Prices, of course, generally fall as supply rises to meet demand. The Agriculture Department figures suggest that soybean prices have held relatively steady since 2015, a sign that farmers are planting enough to meet their customers’ needs.
But that was before the U.S. trade war with China. With China imposing a new, retaliatory tariff on U.S. soybeans, their price per bushel dropped this week by about 20 percent since early May to a 10year low.
Soybean exports have remained flat or dropped somewhat in recent years — peaking at $24.8 billion in 2012 after years of growth, and declining to $21.5 billion last year. But the overall value of the harvest has stayed strong.
Soybean production in each of the last two years was valued at about $41 billion, approaching the peak of more than $43 billion in 2012 and 2013.
Soybeans only became a $30-billion-plus enterprise in the last decade.
Trump is right that Canada has steep dairy tariffs, averaging nearly 240 percent, according to the World Trade Organization.
Despite that, the U.S. last year ran a $474 million surplus in dairy trade with Canada.
KEEPING SCORE: From being up slightly earlier in the day, European indexes were trading lower. Germany’s DAX fell 0.5 percent to 12,622 while France’s CAC 40 dropped 0.7 percent at 5,377. Britain’s FTSE 100 fell 0.3 percent to 7,661. U.S. indexes were poised to open lower, with S&P 500 futures down 0.2 percent and Dow futures 0.4 percent lower.
TRUMP TALK: Trump told the TV channel CNBC he was ready to exchange tariffs with China until all of China’s exports to the U.S. — worth over $500 billion a year — are hit. “I’m ready to go to 500,” he said. Asked if he would do it even at a cost of a stock market drop, he said: “If it does it does.” The comments come as the U.S. government is also considering taxing auto imports. Critics lined up this week to urge the administration to reject the tariffs, arguing they would raise car prices, squeeze automakers by increasing the cost of imported components and invite retaliation from trading partners — and allies — like the European Union and Canada.
ASIA’S DAY: Earlier, before Trump’s comments were aired, most Asian markets finished higher. Japan’s Nikkei 225 bucked the regional trend, losing 0.3 percent to 22,697.88. South Korea’s Kospi added 0.3 percent to 2,289.19. Hong Kong’s Hang Seng gained 0.8 percent to 28,224.48. The Shanghai Composite Index rebounded 2.1 percent to 2,829.27. Australia’s S&P-ASX 200 increased 0.4 percent to 6,285.90.
YUAN DECLINES: The People’s Bank of China set the Chinese currency’s central parity rate to 0.9 percent weaker against the dollar on Friday. If the yuan continues to depreciate, goods exported to China will become more expensive to consumers there. Chinese exports would also be relatively cheaper, possibly balancing out suggested increases in tariffs by the Trump Administration.
ANALYST’S TAKE: “One theory is that the PBOC is depreciating the yuan because it has not enough ammunition to fight a dollar-for-dollar increase in tariffs. The markets are very risk-off. There is a loss in confidence right now,” said Francis Tan, an economist at UOB Bank.
CURRENCIES: The U.S. dollar was trading at 112.45 yen, roughly unchanged from Thursday. The euro rose to $1.1651 from $1.1644.
OIL: Benchmark U.S. crude added 8 cents to $69.54 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 6 cents to at $72.64.