DF Dean Foods Company New

By Benjamin Parkin and Jacob Bunge

Prices for livestock, dairy and soybeans tumbled after U.S. tariffs on imported metal sparketid retaliation from key trading partners. Shares of major agricultural companies also slid.

Commerce Secretary Wilbur Ross said Thursday that the U.S. would impose tariffs of 25% on steel and 10% on aluminum from Canada, Mexico and the European Union beginning Friday. The countries said they would respond with tariffs of their own, including on agricultural goods.

The U.S. industry is already consumed by a trade dispute with China, which has cut into demand for products like soybeans and pork. Many analysts say losing market access to other key trading partners -- most notably if talks over the North American Free Trade Agreement unravel -- could be a potentially devastating blow.

"These tariffs will harm U.S. farmers and take many American farm operations to the breaking point," said Brian Kuehl, executive director of Farmers for Free Trade, which defends U.S. agricultural trade.

Mexico said it would levy duties on U.S. fruit, pork chops and cheese, among other goods. Canada said it would target food products, and the EU was also expected to retaliate against U.S. agriculture.

Canada is the top buyer of U.S. agricultural goods in terms of value, according to the U.S. Department of Agriculture. Mexico ranks third and the EU fifth. Slower sales to major export markets could build up supplies and pressure prices back home.

Lean hog futures for July delivery, the most-active contract, fell 2.6% to 78.05 cents a pound at the Chicago Mercantile Exchange. June-dated live cattle futures fell 1% to $1.0505 a pound.

Soybean futures were also lower, as were contracts for cheese, milk and butter.

Shares of agricultural companies fell on the prospect of losing business in North American and European markets. Grain exporters Archer Daniels Midland Co. and Bunge Ltd. fell 1.3% and 1.1%, respectively. Meat giant Tyson Foods Inc. fell 3.6% and Pilgrim's Pride Corp. fell 3.8%. Top U.S. milk processor Dean Foods Co. slid 5.1%.

"Traders worry that the Trump administration is hardening its trade stance," said AgResource Co. in a note. "The market has become wary of the chaos of the Trump administration in trade negotiations. Certainty in US/world trade is needed, but unavailable today."

U.S. corn and wheat prices were the sole winners in Thursday's session, rising as concern about hot and dry weather in the central U.S. overrode the trade jitters.

This season's wheat crop has struggled through a severe drought that is expected to cut into output, while traders bet the corn crop could also suffer.

Write to Benjamin Parkin at benjamin.parkin@wsj.com and Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

May 31, 2018 16:03 ET (20:03 GMT)

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