Soft commodities slide further as tariff threats heat up

Donald Trump’s plan to impose an additional $100bn in tariffs on imports from China is weighing on soft commodities and farm equipment makers, according to a Financial Times report.

The report indicated that the move by the US president, announced via a White House statement on Thursday night, has escalated the tit-for-tat trade battle between the two countries.

China responded on Friday saying it was “not afraid to fight a trade war” and that it was prepared to adopt “comprehensive countermeasures.”

Soft commodities have endured wild swings this week, suffering sharp intraday drops on Wednesday after China unveiled plans for tariffs on over 100 US products – although the likes of feeder cattle and lean hog futures recovered on the day thanks to a bout of short-covering.

But concerns that Beijing could now further target US agricultural farm goods in retaliation prompted soyabean futures for May delivery to slide two-thirds of 1 percent to $10.235 a bushel on Friday. Corn futures were down one-third of 1 percent at $3.885 a pound. Live cattle futures were down 1.3 per cent while lean hogs were 0.1 per cent lower.

Among US agricultural stocks, tractor maker Deere & Co was down 1.2 per cent, while Caterpillar was down 1.6 per cent. DowDuPont, which counts agrochemicals and seeds as businesses alongside its plastics and chemicals units, was off 1.1 per cent. Monsanto was up 0.3 percent

Food producers were faring better, with many analysts surmising tariff action could depress soft commodity prices, thereby driving down the cost of inputs for such companies. Tyson Foods was up 1 per cent, Spam-maker Hormel gained 1.3 per cent and Pilgrim’s Pride, the US’s largest chick producer, was up 1.1 per cent.

Among the commodity trading and food processing companies, Bunge was up 0.7 per cent and Archer Daniels Midlands added 0.1 percent.

The S&P 500 was down 0.8 percent and the Dow Jones Industrial Average was off 1.1 per cent in mid-morning trade.