The Recovery In Agricultural Futures, Post-Tariff Imposition

Soybean harvesting begins soon, with the new market year (9/1-), and it was thought by some observers that as China would have to eventually access American soybeans, so prices would recover. That event has not occurred.

Source: http://www.barchart.com/futures.

American soybeans continue to sell at a substantial discount, as shown here:

Source: Farmfutures.

Nor have hog prices recovered.

Source: http://www.barchart.com/futures.

While the administration has announced some amount of $12 billion support, only a part of which will be in the form of price supports, this is not factored into the rather dismal reading in the August 2018 farm income forecast:

Net farm income, a broad measure of profits, is forecast to decrease $9.8 billion (13.0 percent) from 2017 to $65.7 billion in 2018, after increasing $13.9 billion (22.5 percent) in 2017. Net cash farm income is forecast to decrease $12.4 billion (12.0 percent) to $91.5 billion. In inflation-adjusted 2018 dollars, net farm income is forecast to decline $11.4 billion (14.8 percent) from 2017 after increasing $13.0 billion (20.3 percent) in 2017. If realized, inflation-adjusted net farm income would be just slightly above its level in 2016, which was its lowest level since 2002. Inflation-adjusted net cash farm income is forecast to decline $14.6 billion (13.8 percent) from 2017 to $91.5 billion, which would be the lowest real-dollar level since 2009. Net cash farm income encompasses cash receipts from farming as well as farm-related income, including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings.

Source: August 2018 farm income forecast.

Net cash income is forecasted to decline. Certainly, not all of the $12 billion package announced is going to farmers, so it is not clear to me that 2018 net cash income will be stabilized. (The USDA announcement of 8/27 indicates initial payments of around $6.2 billion; $4.7 is noted in this article.)