Posted on December, 13, 2024 at 07:46 am
US soybean farmers, already under pressure as values have plummeted this year, could have an even tougher road ahead if new tariffs ignite a trade war between the United States and China in 2025, according to a leading industry economist.
Since his election victory in November, President-elect Donald Trump has floated several tariff ideas directed at China — from across-the-board tariffs of 10% to up to 100% — that have sent soybean prices seesawing. Following Trump’s victory on Nov. 5, nearby US soybean futures swung from around $10 per bushel to highs near $10.50 per bushel, before sinking back below the $10 per bushel range in recent trading.
In the US Department of Agriculture’s (USDA) latest World Agricultural Supply and Demand Estimates report, released Dec. 10, the average US farm price for soybeans was projected at $10.20 per bushel in the current 2024-25 marketing year. That’s down 60¢, or 6%, from the USDA’s November estimate, down $2.20, or 18%, from 2023-24, and down $4, or 28%, from 2022-23.
“Farmers are looking at the largest two-year percentage decline in real cash income this year,” said Scott Gerlt, chief economist for the American Soybean Association (ASA), which represents more than 500,000 soybean farmers across 30 states. “ASA and the National Corn Growers Association commissioned a study to look at how Chinese tariffs on soybeans and corn could potentially affect prices and production. If China implemented dormant tariffs that remain on the books from the last trade war, US soybean prices would fall by about 60¢ per bushel (compared to current prices of about $10 per bushel). If China implemented a 60% tariff, soy prices would then fall by about $1 per bushel.
“Many farmers are already unable to turn a profit with $10 soybeans.”
A $1-per-bushel decline in soybean prices would closely mirror what took place in 2018, when tariffs Trump initiated against Chinese imports triggered retaliatory measures that stifled US exports to the world’s top soybean buyer. Before Trump’s tariffs, the average US farm price was around $9.30 per bushel in January 2018, according to USDA data. By November 2018, it had fallen by nearly $1 per bushel, or 11%.
The average US farm price eventually reached a low near $8 per bushel in May 2019. Soybean prices subsequently exploded in 2020, fueled by pandemic conditions and global supply disruptions. By June 2022, the average US farm price had reached $16.40 per bushel, but has since fallen by 38%, according to the USDA.
Source: World Grain