Economist: US soybean prices could fall in trade war

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.

Meanwhile, since 2018, South American nations including Brazil and Argentina have expanded soybean production to meet China’s needs. Both countries are expecting near-record or record soybean crops in 2024-25, further pressuring prices.

China has been eager to build upon its soybean imports from South America to replace US supply. According to figures released Dec. 6 by Brazilian agricultural association ANEC, Brazil’s soybean exports are expected to top 97 million tonnes in 2024-25. China takes a vast majority of those exports, over 76%. The next closest nation is Spain, taking just 4%.

“During the 2018-19 trade war, Brazil increased its soy production and has never looked back,” Gerlt said. “While Brazil continues to expand production area, a trade war accelerates the trend. A new trade war would likely give South America another irreversible production bump.”

That doesn’t necessarily mean US soybean farmers would be completely cut out of trade with China. In fact, since Trump’s election, China has been expanding its imports of US soybeans to get ahead of any potential tariffs next year. Overall, China’s soybean imports from January-November of this year jumped 9% year on year, according to recent customs data, and are nearing a four-year high.

“There are some reasons for China to want to continue to buy US soybeans,” Gerlt said. “Our beans have lower moisture content and thus store better; buying from both hemispheres provides access to two production cycles per year; and China has a more diversified supply if one market has a shortfall. Even with these factors, another trade war would likely result in permanent, reduced market share for US soy.”

Another area for optimism is the United States’ increasing domestic soybean crush capacity to produce soybean oil to meet growing demand from the renewable diesel market. That also results in more soybean meal production. US domestic crush has reached record levels over 65 million tonnes in 2024-25, according to USDA figures. That number remains overshadowed by China’s domestic crush capacity of 103 million tonnes, which accounts for about 30% of all global crush.

“The domestic soybean crushing industry has thankfully been investing in increased capacity the past few years,” Gerlt said. “Domestic demand is already consuming a larger percentage of US soy production. However, if all the announced new crush capacity is built out, that’s only about 15% of the US crop. China alone buys about 30% of the crop. While we are less reliant on whole bean exports than under the 2018-19 trade war, the industry cannot substitute the demand.

“Even with new domestic crush, we will still be reliant on exports for much of the increased soybean meal production. If the United States loses demand from its major soybean buyers, domestic producers would have to pull back production while South America backfills the void. Another trade war would likely result in permanent, reduced market share for US soy.”