The global grain and oilseed markets face a tumultuous outlook, shaped by potential US tariffs, geopolitical tensions, and volatile energy costs.
Rabobank and CRM Agri provide insights into the challenges ahead for farmers, exporters, and policymakers.
Tariff disputes threaten farmer margins
Anticipated tariff disputes under the incoming Trump administration are set to target imports from key trading partners such as China, Mexico, and Canada.
“These measures risk compressing margins for farmers, particularly those producing major grains and oilseeds, which have already suffered price declines in 2024,” said Carlos Mera, head of agri commodity markets research at Rabobank.
Soybeans likely to bear brunt of trade war
In 2023, the US imported US$195bn worth of agricultural products - marking a 280% increase over two decades. Retaliatory actions, especially from China, could worsen the situation, with US soybean exports likely to bear the brunt.
Soybean prices, down 25% over the past year, could face additional downward pressure.
While the US government may consider compensatory measures, uncertainty continues to cloud the market, said the expert.
CRM Agri concurs: Soybeans face the most uncertainty in 2025.
Proposed tariffs of 60% or more on imports from China could provoke significant retaliatory measures, threatening the viability of US soybean exports to China, the world’s largest buyer. Exports account for over 40% of the US soybean harvest, with China purchasing about 60% of global soybean imports.
Simultaneously, Trump’s focus on reducing energy costs by favoring fossil fuels could undermine the biofuel industry, which heavily relies on soybean oil, claimed the UK analysts.
In 2024, half of the US’s 13 million metric tons of soybean oil production is expected to go toward biodiesel. US crushers may seek new soybean oil export opportunities amid challenging trade relations, commented the CRM Agri team.
This scenario echoes Trump’s first term when Chicago soybean prices hit a 10-year low and soybean oil prices a 13-year low, added the oilseed market specialists.
“Even based on simple supply-demand metrics, soybean prices appear likely to remain under pressure.”
Global soybean stocks for 2024/25 are forecast to reach a record 131.9 million metric tons - a six-year high relative to demand.
Corn: A volatile outlook
Corn prices may start 2025 on a firm note but could weaken later in the year.
Uncertainty surrounding Trump’s trade policies, as well as weather variables, contributes to the volatile outlook, observed the CRM Agri analysts.
Mild La Niña expected
A mild La Niña is anticipated by the year’s end, with effects already visible, such as delayed rainfall in Brazil and dryness in Argentina and the southern US.
While the event’s weak intensity suggests limited impacts, Mera noted potential delays in Brazil’s soybean harvest could affect safrinha corn planting, pushing maturation into the next dry season.
Elsewhere, improved weather conditions in the US, Ukraine, Argentina, and Russia are providing optimism for the upcoming wheat season.
Broader economic implications of US tariffs
The global economic landscape in 2024 has been shaped by falling inflation and moderate growth.
However, Mera cautioned that “US tariffs could fragment global trade and financial flows, impacting the availability of US dollars worldwide. This poses significant risks to developing nations with high dollar-debt exposure. Additionally, a strong dollar typically depresses prices for dollar-denominated commodities.”
Although the Federal Reserve and the European Central Bank have eased policy rates, further cuts may be constrained by inflationary pressures.
“A combination of tariffs and tax cuts could drive inflation higher, limiting the Fed’s ability to lower rates further in 2025,” Mera concluded.
