Planting season, a critical time for farmers, just became more nerve-wracking for U.S. growers of soybeans and corn, reports Bloomberg. In a move that caught many in U.S. agriculture by surprise, China, on April 4, announced planned tariffs on American shipments of the two crops.
The tariffs are set to take effect in 60 days. That gives some farmers the opportunity of making a last-gasp switch to another crop. But for others it’s too late to make a change.
“It puts it into flux,” said Dave Walton, an Iowa farmer, who intends to watch prices closely in the next few weeks amid expectations that China and the U.S. will negotiate to avoid an outright trade war.
“We can switch acres from beans to corn if necessary,” added Walton.
North Americans farmers have until around the end of June to put soybean seeds in the ground, while corn planting typically ends a month earlier.
The U.S. Department of Agriculture (USDA) said last week there will be 88 million acres of corn and 89 million acres of soybeans, covering a combined area larger than California.
The stakes are especially high this year given the parlous state of the agricultural economy. A succession of bumper harvests has led to gluts and depressed crop prices. The USDA projects net farm income will fall to a 12-year low of $59.5 billion, less than half the record level seen in 2013. (Source: Bloomberg)
Articles are chosen for summary in this Market Intelligence blog based on newsworthiness in conjunction with The Infinite Loop themes. Any opinions and views expressed in the articles are generally those of the underlying author from the source listed, are not necessarily current as of the date of this blog, may change as market or other conditions change, and may differ from views expressed by Ivy Investment Management Company and its associates or affiliates. Actual investments or investment decisions made by Ivy Investment Management Company and its affiliates will not necessarily reflect the views expressed in the articles. These articles are distributed for educational purposes only and are not investment advice or a recommendation to purchase, sell or hold any specific security mentioned in the article or to engage in any investment strategy. Investment decisions should always be made based on each investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Securities discussed may not be suitable for all investors.