US soybean acres and farmgate prices could suffer in the event of another trade war with China, according to new research from Rabobank.
A renewed trade war would potentially lower US farmgate prices by US$1.50 to $2/bu and reduce American soybean planted area by up to 5 million acres, the research shows.
With current US farmgate soybean prices already weak, now hovering around $10/bu or below, the worst-case scenario could drag values down to near their mid-2019 low of about $8 during the first trade war.
Meanwhile, a loss of 5 million acres from the 87.1 million planted to soybeans in 2024 would represent a fall of about 6%. If accurate, that would be a much more modest fall than in 2019, when planted area tumbled more than 13 million acres or 14.6% from the previous year to 76.1 million.
US President-elect Donald Trump has promised to ratchet up tariffs on imports from China after he takes office on Jan. 20, suggesting amounts ranging anywhere from 10% to 100%. Rabobank said it expects “significant uncertainties” in US-China trade relations under Trump's second term, with a high likelihood of “renewed trade war escalation.”
“If additional tariffs are imposed, China is expected to retaliate immediately, targeting grains and oilseeds, especially soybeans,” it said.
Meanwhile, Rabobank said the impact of tariffs on China’s own soybean market may be less severe than during the 2018-2019 trade war due to higher state reserve inventories, increased imports from Brazil, and China’s growing adaptation to low-protein feed formulas, which reduce soymeal use and the need for imported soybeans.
At the same time, Rabobank said US soybeans are now becoming less reliant on exports, with domestic crushing expanding rapidly due to surging demand for renewable diesel.
Even in the event of a full-blown trade war, multiple truce talks are likely in 2025, Rabobank said, adding that despite potential retaliatory tariffs, China might still purchase US soybeans in small batches as a goodwill gesture to facilitate trade negotiations.
A joint study by the American Soybean Association and the National Corn Growers Association in October estimated a second trade war would cost corn and soybean farmers between $5 billion and $8 billion annually.
