Soybean futures fell to the lowest level in a decade as an escalating trade war between the United States and China dims hopes that the Asian nation will resume purchases of American beans to ease supply gluts.
Farm commodities, from pork to cotton, dropped on Monday, with soybeans dipping below $8 a bushel for the first time since 2008 in Chicago, after China said it will raise tariffs on some U.S. goods starting June 1.
Agribusiness shares including Archer-Daniels-Midland, which has facilities in Cedar Rapids, and Bunge Ltd. also retreated.
Flaring trade tensions between the United States and China, the world’s top importer, has roiled the outlook for soybean demand as American farmers sow the next crop.
China may stop purchasing U.S. agricultural products, according to the Global Times. The country bought several rounds of soybeans earlier this year as goodwill gestures amid trade talks.
“Clearly there’s uncertainty about where we’re going from here,” said St. Louis-based independent analyst Ken Morrison. “Both parties have backed themselves into a corner.”
The breakdown in negotiations also makes it more likely that some purchases of U.S. goods such as soy and pork might be canceled before delivery, Morrison said. China has purchased about 7.4 million metric tons of U.S. beans that have not yet been shipped, according to U.S. Department of Agriculture data.