If unresolved, trade disputes between the US and China could lead to a significant 20% reduction in US soybean exports and a sharp decline in prices for farmers, according to insights from agribusiness consultant Agrace on Wednesday.
A recent temporary pause in the US-China trade conflict, announced on Monday, may temporarily boost soybean sales in China, potentially reducing tariffs from 145% to only 10%. However, the high costs associated with making US soybeans competitive mean that this will not necessarily aid farmers in recovering, experts argue.
Basse, speaking at the Graincom conference in Geneva, estimated that US soybean exports could drop to 1.5 billion bushels, down from an initial 1.865 billion, unless significant trade developments occur.
The Chicago Trade Commission’s SX25 U.S. soy futures also face potential declines, projected to fall by $9 per bushel, with current trading at $10.6 per bushel, according to Basse.
“It’s crucial that trade agreements between the US and China are finalized by the summer’s end, or else the export predictions will materialize, thereby impacting US farm revenues. Time is of the essence,” he cautioned.
Conversely, if the tariffs revert to their previous levels, soybean prices could rise to around $13, he noted.
Basse added, “While the ceasefire is beneficial, Brazil is expected to have an additional 20 million tonnes of soybeans ready for export by September 1.”
China represents a vital market for US farmers, with over half of US soybean exports linked to the country in the last marketing year.
Nevertheless, American farmers are concerned that merely pausing tariffs won’t suffice, particularly as Brazil—China’s primary soybean supplier—has seen advantageous harvests and lower prices, while not facing those same tariffs.
Furthermore, China, being the largest crop importer globally, has already procured about 70% of its soybean imports from Brazil.
In related market movements, while other crops like corn and wheat are not heavily impacted, Chicago prices for corn have sharply decreased, dropping from $4.40 to $3.70, and from $5.56 to $4.90 for wheat.
