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U.S. grains: Soy, corn tumble as China slaps tariffs on imports

Investors rattled as China targets huge soybean trade flows

Chicago | Reuters — Chicago soybean futures tumbled two per cent on Wednesday after China readied tariffs against U.S. soy, corn, beef and other goods to retaliate against the Trump administration’s planned tariffs on Chinese exports as a trade war intensified.

U.S. corn futures also fell sharply, then recovered a portion of the heavy losses. Wheat prices were nearly flat.

Soybeans for May delivery settled 22-3/4 cents lower at $10.15-1/4 per bushel, retracing some losses after plunging five per cent to a two-month low of $9.83-1/4 (all figures US$).

China announced it would impose tariffs on U.S. agricultural products, planes and chemicals in response to Washington’s proposed duties on Chinese electronics and other exports.

Soybeans were seen as one of China’s best weapons in a trade war and Beijing announced its tariffs 11 hours after the move by Washington.

“The big reaction is on soybeans because the trade impact is the greatest, with 35 million tonnes of U.S. soybeans imported a year by China,” said Michel Portier, head of consultancy Agritel.

China cannot import the same volumes of soybeans without buying from the U.S. Top exporter Brazil just reaped a bumper harvest but Argentina’s soy crop was reduced sharply by drought, limiting potential alternative suppliers.

“Confirmation of the details are needed for a full assessment, but it seems there will be an import levy on U.S. soybeans,” said Matt Ammermann, commodity risk manager at INTL FCStone. “In the near term it looks bearish for prices as some investors are selling futures right now and will likely ask questions later.”

China did not set a date on when it would impose the tariffs.

“This doesn’t change the world supply and demand,” said ED+F Man Capital Markets analyst Jeff Thompson.

The U.S. Department of Agriculture on Wednesday said China bought 129,000 tonnes of U.S. soybeans within the past 24 hours and 325,000 tonnes were sold to unknown destinations.

China is less dependent on imports of U.S. corn and wheat due to its longstanding national security pledge to be self sufficient in grains.

Chicago Board of Trade May corn futures fell 7-1/2 cents to $3.81 per bushel, above an earlier low of $3.72. CBOT May wheat was 1-3/4 cents lower at $4.55-3/4.

— Michael Hirtzer reports on commodity markets for Reuters from Chicago; additional reporting by Gus Trompiz and Sybille de La Hamaide in Paris, Michael Hogan in Hamburg and Colin Packham in Sydney.

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