Farm & Food File: If you want change, you’re in the right place

If you are one of the millions of Americans who pollsters say “voted for change” last November, boy, are you getting it now.

As of this spring, for example, illegal border crossings in the western United States, according to CBS News, have “plunged to a level not seen in at least 25 years.” That’s a massive change for America’s usually porous southern border.

Massive change also sums up the Trump administration’s tariff policy, but complex, arcane and costly might be more accurate.

While it’s impossible to know the change global trade will undergo because of these tariffs, foreign and domestic markets are passing judgment on the plan every day and they hate it.

As of April 20, the S&P 500 index, a broad measure of Wall Street sentiment, is down 14% since Inauguration Day. That drop is the “stock market’s worst start to a presidency in more than a century,” reported Politico April 22.

In late April, the Wall Street Journal ran a headline that confirmed S&P’s tough judgment: “Dow Headed for Worst April Since 1932 as Investors Send ‘No Confidence Signal.’”

Comparing anything to the first year of the Great Depression is never good.

If you’re a holder of gold, however, you’re not only good; you’re, well, golden. Gold’s per ounce price from Jan. 1 through April 20 rose almost 30%, from $2,750 to nearly $3,500. Take that Wall Street.

Surprisingly, ag commodities have held up well despite equity market chaos caused by the often-changing Trump tariff program.

For the year, cattle futures are up almost 10%, cotton up 4%, corn up 5%, soybeans up 3% and wheat, the only loser in the bunch, is down a very modest 2.5%.

Why such a muted — and, in fact, strikingly resilient — response to what appears to be bone-rattling change in global trade ag policy and nervous equity markets?

Aaron Smith, an ag economist at the University of California Davis, takes a crack at an explanation in his latest Ag Data News weekly column.

Despite the fact that new U.S. tariffs on China and China’s retaliatory tariffs on the United States “make little economic sense,” prices for the biggest ag export to China, soybeans, have basically just “yawned” at the news.

That’s startling because it’s not like we sell China a boatload or two of soybeans; think entire fleets.

“Soybeans make up about 10% of total U.S. exports to China, and about half of its agricultural exports,” writes Smith.

Indeed, “of the approximately 4.4 billion bushels of soybeans produced by American farmers each year, a quarter are exported to China.”

So, why is the export-dependent soybeans futures market sleepwalking through today’s tariff-riddled spring?

“Maybe the time of year has something to do with it,” surmises Smith, noting the U.S. soy exports to China “peak in the fall after the harvest.”

China then turns to South America to top its bins until the new U.S. bean crop usually brings abundant supplies and lower prices.

Still, “there aren’t many soybeans being exported to China at the present, so perhaps that explains the muted price response.”

“If the tariffs persist,” Smith concludes, “they are likely to have substantial economic costs.”

“Yet,” he adds, stepping out on thin limb, “so far, the soybean market seems underwhelmed.”

“My bet,” he writes as he inches further out into space, “is that markets see 125% tariffs as so ridiculous that they will mostly be gone by November.”

He’s right; 125% tariffs are ridiculous. He’s also right about another thing; everything could — and likely will — change between now and November.