U.S. to provide another round of aid to farms

Amid trade dispute, China still buying fewer soybeans

The federal government will make a promised second round of payments to farmers affected by tariffs, easing some uncertainty but not solving the larger problem of trade disruption that has been a drag on profits since the summer.

“While there have been positive movements on the trade front, American farmers are continuing to experience losses due to unjustified trade retaliation by foreign nations,” Agriculture Secretary Sonny Perdue said in a statement. “This assistance will help with short-term cash flow issues as we move into the new year.”

President Donald Trump and his Chinese counterpart, Xi Jinping, agreed on Dec. 1 to a short-term truce in escalating tariff disputes that have disrupted the flow of hundreds of billions of dollars of goods, including soybeans to China.

China is typically the largest importer of U.S. soybeans in the world, by far, and the flow of soybeans to that country stopped in the summer, only to open slightly this month when Chinese buyers purchased 1.1 million metric tons of soybeans after U.S.-Chinese trade talks resumed.

On Wednesday, the De-

partment of Agriculture said in a statement that exporters have sold a second order, about 1.2 million metric tons, to China for delivery by Aug. 31.

Government data show China buys 30 million to 35 million tons of U.S. soybeans in a normal year.

Soybean farmers have been particularly hard-hit by the Chinese tariffs. They will receive about 75 percent of the total $9.6 billion in aid. Hog, corn, dairy, almond, cotton,

sorghum, cherry and wheat producers also are eligible for payments under the program, which was first announced in July.

Soybean growers will get $1.65 per bushel of their 2018 harvest, up to $125,000 per farm.

Up until this week’s announcement, farmers were guaranteed 82 cents per bushel in aid on soybeans, and this second half of the payment could help push many farmers over break-even for the year.

“I think everybody will be all right for this year. I’m more worried about the following year,” said Joel Schreurs, a farmer west of Marshall, Minn. “It will help, but in the long run what we need is to export our soybeans.”

Farmers who sold grain ahead in the spring on the futures market are at an advantage, as are those whose crops were average or above average, since the government assistance is paid by the bushel, Schreurs said.

The latest soybean exports to China have prevented the market from crashing but haven’t pushed prices significantly higher, said Virginia McGathey, the president of McGathey Commodities Corp. in Chicago. Investors are looking for “some real resolution” to the trade war and a large-scale movement of supplies out of the U.S., she said.

“China remains an important market for U.S. soybean farmers, and we view these recent sales, while relatively small, as important steps forward in our overall trade relationship,” U.S. Soybean Export Council Chief Executive Officer Jim Sutter said in an email Tuesday.

Before the USDA statement Wednesday, a person with direct knowledge of the transactions said China’s state stockpiler Sinograin and food

company Cofco purchased about 10 cargoes of soybeans from the U.S. Gulf region Tuesday. Unconfirmed market speculation put those sales at as many as 20 cargoes, or about 1.2 million tons, shipped mostly through Pacific Northwest and Gulf terminals, Arlan Suderman, chief commodities economist in Kansas City, Mo., for INTL FCStone, said before the official figures were announced.

The recent transactions pushed up a local premium by about 5 cents per bushel, according to two traders. On Monday, the aggregate spot price in Louisiana near the U.S. Gulf rose 17 cents, or 1.9 percent, to $9.12 a bushel, according to data compiled by DTN.

“We are seeing firmer bids based off of additional Chinese purchases,” Tiffany Heier, a station manager at the Verona location for the James Valley Grain cooperative in North Dakota, said in an email.