Chicago crop futures were all broadly lower Tuesday morning as US-initiated trade wars kicked off.
US President Donald Trump followed through with threats to levy a 25% tariff on most imports from Canada and Mexico, while also doubling to 20% tariffs on goods coming from China beginning at midnight. Canada has responded with tariffs on tens of billions of dollars' worth of products imported from the US, while retaliation is also expected to come from Mexico, a major buyer of American corn and wheat.
China – the world’s largest buyer of soybeans - has ramped up existing tariffs on US agricultural exports, including both corn and soybeans, and further announced this morning it has suspended the soybean import licenses of three US companies, including Louis Dreyfus and CHS Inc.
Trade war uncertainty had already been overhanging the markets for days, after both corn and soybean futures touched multi-month highs around mid-February amid drought concerns in Argentina.
As the May futures charts below show, soybeans - and especially corn and wheat – have moved sharply lower since about the middle of last month. Wheat and corn have lost more than 13%, while soybeans have fallen 8.5%. Canola futures have suffered as well, sliding about 6.5%, although a tightening domestic supply-demand situation has offered some support.
An expected record-large 2024-25 crop out of Brazil also continues to weigh on soybeans while corn has been undermined by expectations for a significant increase in US planted area this spring.
Trump’s first trade war with China from 2018-2019 significantly impacted American farm exports, causing a major decline in sales, particularly of soybeans and other grains. It led to substantial losses for US farmers, with soybeans – the hardest-hit farm commodity -briefly sinking to near $8/bu.
May corn: source – Barchart
May soybeans: source – Barchart
May Chicago wheat: source – Barchart
May canola: source – Barchart
