US soybean exports may drop 20% and the prices paid to farmers will plunge if the United States and China fail to resolve their trade dispute limiting US soybeans from their largest market, agribusiness consultants AgResource said on Wednesday.
The temporary truce in the US-China trade war, announced on Monday, would not help US farmers revive soy sales in China as Chinese duties, even reduced to 10% from 145%, remained too high to make US soybeans competitive, AgResource President Dan Basse told Reuters.
US soybean exports could slump to 1.5 billion bushels from an initial estimate of 1.865 billion without a substantive deal, Basse said on the sidelines of the GrainCom conference in Geneva.
At the same time, US soybean futures on the Chicago Board of Trade SX25 could fall as low as $9 per bushel, compared to $10.6 a bushel traded on Wednesday, Basse said.
“It’s important that any US-China trade deal happen by late summer or the export forecast will become reality, pressuring US farm income. The clock is ticking,” he said.
In contrast, if a deal brought tariffs back to their previous level, soybean prices could surge as high as $13 a bushel, he added.
“The truce helps but Brazil will have an additional 20 million metric tons of soybeans to export on September 1,” Basse said.
China has been a critical market for US farmers representing more than half of US soybean exports in the most recent marketing year.
However, American farmers worry the tariff pause will not be enough to help them, as Brazil, the biggest soy supplier to China, has ample supplies from a record harvest, lower prices, and its farmers do not face any Chinese tariffs.
China, the world’s largest crop importer, already sources roughly 70% of its soybean imports from Brazil.
In other crops, corn and wheat would be less impacted but Chicago prices would also fall sharply, to as low as $3.70 for corn CZ25 from $4.40 on Wednesday and $4.9 WZ25 from $5.56, he said.
