US soybean exports may fall 20% without China trade deal, AgResource says
GENEVA, May 14 (Reuters) - U.S. soybean exports may drop 20% and the prices paid to farmers will plunge if the United States and China fail to reach a deal in their trade dispute limiting U.S. soybeans from its largest market, agribusiness consultants AgResource said on Wednesday.
U.S. soybeans exports could slump to 1.5 billion bushels from an initial estimate of 1.865 billion without a deal, AgResource President Dan Basse told Reuters on the sidelines of the GrainCom conference in Geneva.
At the same time, U.S. soybeans farm gate prices - the average price paid to farmers - may collapse to $9.10 bushel in 2025/26, compared to $10.25 a bushel forecast by the U.S. Department of Agriculture, Basse said.
"It's important that any U.S./China trade deal happen by late summer or the export forecast will become reality pressuring U.S. farm income. The clock is ticking," he said.
The temporary truce in the U.S.-China trade war, announced on Monday, would not help U.S. farmers revive soy sales in China as Chinese duties, even reduced to 10% from 145%, remained too high to make U.S. soybeans competitive.
"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 U.S. farmers representing more than half of U.S. 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.
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US immigration raid of Omaha meat plant cuts staff, fuels food production worries
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What proportion of the tariffs will companies "swallow", and how much will they pass on to their customers? Zooming out, inflation appears to be cooling around the world, although this trend is expected to reverse once tariffs start to fuel higher goods price inflation. Figures on Wednesday showed that U.S. consumer inflation and Japanese wholesale inflation were lower than expected in May. These reports follow similar numbers from Europe recently, and China remains stuck in its battle against deflation. Next up is India, which releases consumer inflation figures on Thursday, which are expected to show annual inflation slowed to 3.0% in May, the lowest in more than six years. Another focus for investors on Thursday will be the auction of 30-year U.S. Treasury bonds. US stocks-bonds warnings flash amber again Calm has descended on U.S. markets following the 'Liberation Day' tariff turmoil of early April. But Wall Street's rally has revived questions about U.S. equity valuations, as stocks once again look super pricey compared to bonds. Since the chaotic days of early April, U.S. equities have rebounded fiercely, with the S&P 500 up 25%, putting the Shiller cyclically adjusted price-earnings (CAPE) ratio for the index in the 94th percentile going back to the 1950s, according to bond giant PIMCO. Stocks are looking expensive in absolute terms, and in relation to bonds. The equity risk premium (ERP), the difference between equity yields and bond yields, is near historically low levels. According to analysts at PIMCO, the ERP is now zero. The previous two times it fell to zero or below were in 1987 and 1996–2001. In both instances, the ultra-low ERP precipitated a steep equity drawdown and sharp fall in long-dated bond yields. "The U.S. equity risk premium ... is exceptionally low by historical standards," they wrote in their five-year outlook on Tuesday. 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