By Benjamin Parkin 

Soybean prices fell more than 5% to the lowest point in two years Tuesday, as escalating trade tension between the U.S. and China dimmed hopes that U.S. farmers might win a reprieve from duties on the crop set to take effect next month.

Prices for grain and livestock also declined as traders bet Chinese tariffs would jeopardize demand for U.S. exports. Commodities from crude oil to copper to lumber also fell.

President Donald Trump on Monday asked his staff to prepare $200 billion in additional duties on Chinese products, four times the amount of the duties his administration announced last week. Officials in Beijing responded to that first round of duties with $50 billion in reciprocal duties on soybeans, pork and other products. China is the largest buyer of U.S. soybeans.

The uncertainty over which tariffs will take effect and when has slowed agricultural trade to a trickle, said Bobby Pelz, a founder of grain brokerage McDonald Pelz Global Commodities LLC.

"Nobody has a clue what to do," said Mr. Pelz, whose brokerage negotiates grain and soybean sales from the U.S. to China, among other places. "It has hurt the entire grain industry."

At one point Tuesday, soybean futures had lost more than 7%, hitting their lowest point since March 2016. Wheat and hog prices both fell. Other commodity markets also tumbled as traders bet the dispute could hurt economic growth globally and damp demand for copper, oil and other materials in China and elsewhere.

Minnesota farmer Tim Velde said there's little he can do to stem losses on the value of the 1,000 acres of corn and soybeans he's planted this year. If prices continue to fall, he fears he could struggle to secure a loan for next year's crop. He recently decided not to purchase a new planter he'd been shopping for.

"The equipment salesmen thought they had a live one on the hook, but I told them I'm not going to do anything yet," he said.

Longer term, Mr. Velde worries the dispute between U.S. and Chinese officials could push China to seek more a more lasting alternative to U.S. crops.

"We know it's going to hurt us now and the potential of it hurting us down the road is quite high," Mr. Velde said.

Farmer Michael Petefish said falling soybean prices this month had slashed about $60 an acre on the value of the crop he planted this spring on about 2,000 acres near Claremont, Minn. "If you were close to operating in the red, the type of development could push you into the red," said Mr. Petefish, who heads the Minnesota Soybeans Growers Association. He said he's been shielded from some of the recent price declines because he sold some of his crop in advance at a profitable price point.

Farmers can sell their crops in advance and use futures contracts to shield themselves against lower prices. But few farmers sell their entire harvest ahead of time, since bad weather can cut into crop yields, making it hard to know exactly how many bushels of beans or grain each field will produce.

Some farmers say they could take their frustrations to the ballot box if trade disputes continue to weigh on crop prices.

Many farmers supported Mr. Trump in 2016, but in the past, they've played both sides of the aisle: Mr. Petefish said Democrats have been viewed as friendlier toward biofuels, a market for the corn they grow, and some federal support programs. Republicans, meanwhile, favor lower taxes and looser regulation that many farmers say makes their businesses easier to run.

Mr. Petefish said farmers are also used to Republicans supporting free trade with the foreign countries that buy their crops. This year, he said, "Trump has flipped that script a bit."

Jesse Newman and Jacob Bunge contributed to this article.

Write to Benjamin Parkin at Benjamin.Parkin@wsj.com

(END) Dow Jones Newswires

June 19, 2018 13:50 ET (17:50 GMT)