June 19, 2018 / 4:19 PM / 5 months ago

U.S. grains, livestock prices collapse on China trade war fears

CHICAGO, June 19 (Reuters) - U.S. crop and livestock prices tumbled on Tuesday - with soybean futures hitting lows not seen in nearly a decade - as U.S. President Donald Trump threatened more tariffs on $200 billion of Chinese goods, stoking fears of an increasingly hostile trade war between the world's two largest economies.

Trump's threat followed his administration's announcement of tariffs on $50 billion of Chinese goods last week, which triggered retaliatory tariffs by Beijing on a slate of U.S. products, including soybeans and corn.

The U.S. exported to China $12.4 billion worth of soybeans last year, the single most valuable U.S. agricultural export product to its Asian rival.

Trade jitters have slammed agricultural markets over the past two weeks on worries that China - the largest importer of U.S. soybeans, pork and cotton - would slow or halt purchases of those and other U.S. farm goods.

"When you get in a fight with your biggest buyer of agriculture, and the world's largest soybean buyer, even if (they) were to buy 20 percent less, it's a big deal," said Dan Basse, president of Chicago-based consultancy AgResource Co.

Chicago Board of Trade soybeans fell as much as 6 percent and wheat slumped more than 4 percent. Corn , cotton and ethanol futures notched life-of-contract lows.

The trade fight with China comes amid elevated trade tensions with several other top U.S. farm product importers, including Mexico and Canada, over Washington's tariffs on imported steel and aluminum.

U.S. crop farmers have lost an estimated $100 per acre in revenue with the swift escalation in trade tensions over the past two weeks, the most rapid erosion of U.S. farm profit since at least 1979, Basse said.

The steep grain slump rippled across agricultural commodities markets, with prices for hogs and cattle, which normally benefit from cheap feed prices, also dropping.

Chicago Mercantile Exchange lean hog contacts shed more than 2 percent of their value early on Tuesday, as trade jitters and a tumbling U.S. stock market triggered broad liquidation by commodity funds. Live cattle futures at one point dropped 1 percent, led by Wall Street's retreat and a higher dollar that makes U.S. goods less attractive to foreign buyers.

Stock prices for U.S. grain merchants and meat processors were mixed.

Archer Daniels Midland Co shares slipped 0.6 percent to $45.90, and CHS Inc shares lost 0.8 percent to $29.73. Bunge Ltd’s stock was up 1 percent at $71.81. (Additional reporting by Julie Ingwersen, Theopolis Waters, Mark Weinraub, Michael Hirtzer and Tom Polansek in Chicago. Editing by P.J. Huffstutter and Bill Berkrot.)

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