Another US-China trade war may drop US soybean prices below $9/bushel, Rabobank says

By Karl Plume

CHICAGO, Jan 6 (Reuters) - U.S. soybean prices could slump below $9 a bushel, well below farmers' cost of production and the lowest since 2020, if President-elect Donald Trump's threatened tariffs spark another trade war with China, analysts with Rabobank said.

The trade war could allow Brazil to further dominate China's oilseed imports and supply up to a record-large 80% of Beijing's total import needs, analysts said in an internal RaboResearch report made public Monday.

China is the world's top soy buyer and a crucial market for both U.S. and Brazilian farmers, who supply the bulk of China's imports. About 74% of China's soybean imports came from Brazil in the 2023-2024 marketing year.

Trump has vowed to impose tariffs of 10% on global imports along with a 60% tariff on Chinese goods, prompting concerns that Beijing would retaliate with tariffs of its own on agricultural products such as soybeans. Trump's tariffs in 2018 began the last trade war between the countries.

"If additional tariffs are imposed, China is expected to retaliate immediately, targeting grains and oilseeds, especially soybeans," the analysts said.

Another U.S.-China trade war would come as a hard blow to American farmers, who have seen net farm income drop nearly 23% since 2022, according to the latest U.S. Department of Agriculture data.

Benchmark prices for soybeans, the largest U.S. agricultural export by value, and other major row crops such as corn, are hovering near four-year lows under ample global supplies, including expected massive crops in Brazil. U.S. soybean futures settled around $9.98 per bushel on Monday.

If there were a new trade war between the two global powers, U.S. farmers, who seeded 87.1 million acres (35.2 million hectares) of the oilseed last year, could slash plantings by up to 5 million acres this spring, analysts said.

That drop could eat into domestic feedstock needed by U.S. biofuel suppliers.

Beijing's reliance on U.S. imports has declined since Trump's first term, as China has expanded imports from Brazil and bolstered its state soybean reserves, while also adjusting livestock feeding rations to rely less on imported soy.

"These three factors create a scenario where U.S. soybeans could be completely shut out of the Chinese market in a potential new trade war," Rabobank analysts said.

(Reporting by Karl Plume in Chicago; Editing by Rod Nickel)

((karl.plume@thomsonreuters.com; +1 313 484 5285; Reuters Messaging: karl.plume.thomsonreuters.com@reuters.net))