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President Trump's Oval Office Remarks on Trade with China

Trump | Oval Office Remarks February 19, 2019

Q How confident are you that it will be finished by March 1? Or are you considering extending that deadline?

THE PRESIDENT: Well, they are very complex talks. They’re going very well. We’re asking for everything that anybody has ever even suggested. These are not just, you know, “let’s sell corn or let’s do this.” It’s going to be selling corn but a lot of it – a lot more than anyone thought possible. And I think the talks are going very well – with China, you’re referring to?

Q Yes.

THE PRESIDENT: And the talks are going very well.

Our group just came back and now they’re coming here. I can’t tell you exactly about timing, but the date is not a magical date. A lot of things can happen.

The real question will be: Will we raise the tariffs? Because they automatically kick in to 25 percent as of – on $200 billion worth of goods that they send. So I know that China would like not for that to happen. So I think they’re trying to move fast so that doesn’t happen. But it’s – we’ll see what happens.

I can only say that the talks with China on trade have gone very, very well. In the meantime, our economy is very strong. We’re doing well.

I don’t know if you noticed, but deficits seem to be coming down. And last month it was reported, and everybody was surprised, but I wasn’t surprised. We’re taking in a lot of money coming into our Treasury from tariffs and various things, including the steel dumping. And our steel companies are doing really well. Aluminum companies also. So we’re very happy about that.

I think that it’s – they’ll be coming very shortly. They’re going to have very detailed discussions on subjects that have never really been even discussed by people that sat in this chair and they should have been. Very important subjects. And I think we’re doing very well. Okay?

Soybean Exports since the Onset of Tariffs

by Todd Hubbs, University of Illinois

The evolving developments with tariffs between the U.S. and China continue to influence the outlook for soybean prices. The relationship between U.S. and competitor export prices along with the changing nature of trade flows merit monitoring during the 2018–19 marketing year.



The implementation of tariffs on Chinese goods and the subsequent retaliation led to an adjustment of trade flows in world soybean markets over the last few months. As the tariffs, went into effect, a price gap opened between Brazilian and U.S. export prices. The gap continuously widened when comparing an index of soybean prices at the port of Paranagua and New Orleans prices since early June.


This chart illustrates how the price of U.S. soybeans for export at the port of New Orleans has dropped below the price of Brazil sourced soybeans from the port of Paranagua since June of 2018.

The gap reached its broadest level late last week at approximately $1.90 per bushel difference. New Orleans prices came in near $8.50 per bushel. It is difficult to predict future changes in the spread between the two prices, but it directly relates to the tariff level in China on U.S. soybeans. The development of this price gap indicates the impact of tariffs on soybean markets and highlights switches in Chinese soybean buying this year. Brazilian soybean exports attained record levels in May with exports coming in at 453.7 million bushels. Soybean exports from Brazil continued to show strength through August with the Brazilian export pace exceeding the previous five-year average by 47.5 percent according to Brazilian export data. Meanwhile, the large drop in U.S. soybean prices led to a jump in soybean exports over the last quarter of this marketing year from the U.S.


Both U.S. and Brazilian soybean exports exceeded the five-year-averages in the month of August. However, ILLINOIS’ Todd Hubbs cautions the U.S. increase, derived from countries other than China, is likely not to make up for the expected losses in soybean trade to that nation if the Trump Administration trade row persists.

The USDA soybean export estimate for the 2017–18 marketing year currently sits at 2.11 billion bushels, an increase of 45 million bushels since the June estimate. An expectation of additional bushels added to soybean exports for the 2017–18 marketing year looks probable based on recent export reports. Census Bureau export estimates through July placed soybean exports at 2.051 billion bushels. Census Bureau export totals came in 56 million bushels larger than cumulative marketing year export inspections over the same period. As of August 30, cumulative export inspections for the current marketing year totaled 2.068 billion bushels. If the same difference in export pace continued through the remainder of the marketing year, soybean exports would total 2.124 billion bushels for the 2017–18 marketing year, 14 million bushels above the current estimate. During the last four weeks, export inspections of soybeans averaged 30.6 million bushels per week. Low soybean prices encouraged exports to destinations other than China in the previous two months.


These pie charts illustrate how the final destination of U.S. soybean exports for the month of July changed this year from the previous four years.

A detailed look at July export totals by country, the first full month under the new tariffs, provide a glimpse of how trade flows appear to be adjusting. While Chinese imports fell by 10.7 million bushels from last July, numerous countries increased soybean purchases at the lower prices. Egypt, the European Union, and Taiwan saw the highest increases over last year at 10.9, 5.7, and 8.7 million bushels higher respectively. U.S. soybean exports to China typically reach the lowest levels of the marketing year in the summer and build strength as U.S. harvest progresses. A large pullback in Chinese demand for U.S. soybeans appears set to continue indefinitely. The growth in soybean exports around the world relies on the lower prices in place since June.

A large amount of uncertainty surrounds soybean exports in the 2018–19 marketing. Currently, the USDA forecasts 2.06 billion bushels of soybean exports. Export sales for the next marketing year sit at 510.4 million bushels as of August 30, down 54.8 million bushels from last year. Sales to China came in at 46.5 million bushels, down 80 percent from the same time last year. Stronger sales figures to Mexico, Canada, and Pakistan mitigated weaker sales totals. The ability for the rest of the world to make up for typical Chinese exports in the first half of the 2018–19 marketing year, when U.S. exports to China are at the highest levels, seems unlikely. The USDA reduced the Chinese soybean import forecast to 3.491 billion bushels in the last WASDE report. Recently, the spread of African swine fever saw China indicate an even further reduction in soybean imports over the next year to 3.2 billion bushels, down 9.5 percent from last year. While decreased Chinese import projections may be optimistic, the prospect of substantial increases in U.S. and South American soybean production next marketing year under a lower export demand scenario would keep U.S. prices under pressure.

The growth of the U.S. trade deficit to China in August and the high likelihood of another round of tariffs between the two nations makes a resolution of trade issues a low probability event for the near future. U.S. exports of soybeans jumped over the last quarter of the marketing year as lower prices spurred demand around the world. A large U.S. crop with lower export demand over the next marketing year set up a bearish picture for soybean prices.

Selling Soybeans Across the Scale


This fall farmers will harvest a record sized soybean crop. USDA says about 4.7 billion bushels. They’ll need a home and farmers in North Dakota are really worried. About 2/3rds of their crop is shipped by rail to the Pacific Northwest for export to China. The Trump administration trade policies have mostly closed that market says North Dakota Senator Heidi Heitkamp, “What I would tell you is not only have you disrupted the markets and we have taken a haircut, you may not be able to sell them which is something I’ve been talking about for a long time.” Heitkamp was speaking to farmers in Fargo at the Big Iron farm show this week.

The cash price of soybeans has tumbled across the whole of the Midwest and some elevators are telling farmers not to bring their beans to town. Those soybeans from the Dakota’s and Minnesota are going to try and find another way out of the country. That’s probably through St. Louis and down the Mississippi River. It’s a brutal cash price situation that backs right up into Illinois says Todd Hubbs, “I hope some people put in at $10 to $10.30. Now it is just a lot of damage limitation and hopefully you get a good yield and you can market some of those soybeans right across the scale, but you are looking at really low prices.”

Hubbs, a commodity marketing specialist from the University of Illinois, thinks the only other option is for farmers to store soybeans on the farm and to hope for an end to the trade dispute with China or for a weather problem in Brazil, or both. Though he admits hope is not a strategy.

July WASDE to Reflect Tariffs

This Thursday’s USDA’s monthly supply and demand estimates will include the impact of the Trump Administration’s tariffs. Gary Crawford talks with the chair of the World Agricultural Outlook Board Seth Meyer about the July WASDE. The report is scheduled for release at 11 a.m. central time Thursday, July 12, 2018.

How to Play Trump's China Deal for Soybeans

The President has been tweeting about agriculture. He says the potential deal with China will result in “massive” export increases for farm commodities. Most have taken this to mean, at a minimum, that the flow of soybeans will be increased. University of Illinois agricultural economist Todd Hubbs has been pondering the implications and the deal.

Todd Hubbs specializes is row crop commodity marketing at the University of Illinois. You may read his thoughts on marketing soybeans in today’s (this week’s) post to the farmdocDaily website.

No Good Way for Perdue to Protect Farmers

President Trump has asked the Secretary of Agriculture to protect U.S. farmers from the trade dispute with China. However, there aren’t many options for Sonny Perdue.

Last week Sonny Perdue was on the road for his second RV tour of farm country. His first tour was last summer. That’s when he told producers he would be their salesman to the world. Now he’s being asked to be their protector in the face of trade restrictions, some in place others proposed, as President Trump sets about rectifying what he sees as unfair trade with China. However, Perdue isn’t saying what he’ll do for farmers and there may be a good reason that’s the case says University of Illnois Ag Policy Specialist Jonathan Coppess, “There are not a lot options for the Secretary when it comes to the covered commodities.”

Typically USDA lawyers will explain there is flexibility in the original CCC charter act and the general powers to improve prices. Yet, because Congress has stepped in and directed spending for commodities via programs like ARC and PLC, the Secretary’s administrative powers are limited.

Most of the heavy lifting to protect farmers from any trade war blowback then, says Coppess, would need to be done by congress.

Secretary Perdue Comments on Trade Disputes