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Informist, Friday, May 16, 2025

 

By Anjali Lavania

 

MUMBAI – Indian soybean farmers and traders may finally heave a sigh of relief from the continued fall in prices, as easing of trade tensions between the US and China signals a possible turnaround in global soybean dynamics.

 

Last month, China had effectively halted purchases of soybean from the US as part of its retaliatory trade measures, affecting global supply and pushing Indian soybean prices below support levels. As China is a large buyer of US soybean, traders were worried that its action would lead US exporters to dump the produce in other countries, including India. The glut, they were worried, would depress prices of the oilseed.

 

"In early March, China imposed a 10% tariff on US soybean in response to a similar tariff imposed by the US on Chinese goods. Following further US tariffs, China retaliated with an additional 34% tariff on all US goods, bringing the total tariff on soybeans to 44%," said Rahul Chauhan, director of iGrain India.

 

The shift led Chinese buyers to turn to alternative suppliers, primarily Brazil, and resulted in the cancellation of US soybean shipments. This, in turn, led to oversupply, lower prices on the Chicago Board of Trade, and downward pressure on soybean prices — including in India, for a short period of time.  

 

However, with Washington and Beijing now stepping back from the tariff war, there is renewed optimism. The US has agreed to temporarily slash tariffs on Chinese goods from 145% to 30% for 90 days. In response, China has lowered its tariffs on American imports from 125% to just 10%. The move could ease the glut that weighed on prices across markets.

"The announcement of a trade deal between the US and China is likely to have a stabilising effect on global soybean markets," said Indrajit Paul, head of research at Agrocorp International. "With the resumption of trade between the US and China, this excess supply is expected to diminish, potentially leading to an increase in global soybean prices. Consequently, Indian soybean prices may also see some improvement due to the tightening of global supplies and the resultant upward pressure on prices. Indian soybean prices are likely to trade in the range of INR 4,500-INR 4,700 per 100 kg in the next one-two months." 

 

Currently, prices in most domestic markets are in a range of INR 3,800-INR 4,200 per 100 kg, said Shailendra Soni, a trader from Madhya Pradesh. 

 

Experts say that with tariffs easing and trade routes reopening, demand for soybean and its derivative products such as soyoil should climb back, supporting a global price recovery. "The reduction of tariffs is significant and could influence the dynamics of soybean and soyoil prices. The increased demand for imports may exert upward pressure on prices on international exchanges like the CBOT. Therefore, this tariff reduction could support soybean and soyoil prices on the CBOT," Paul said.

 

July soybean futures closed at a one-month high of $1,077.6 per bushel on Thursday, according to CME Group. At 1236 IST Friday, the soybean contract for July delivery on the Chicago Board of Trade was up 0.2% at $1,053.25 per bushel.

 

However, not everyone shares the optimism. Some point to Brazil's continued dominance in soybean exports and say the Latin American country, which has one of the lowest soybean prices, may deprive the US of taking full advantage of the temporary tariff relief.

 

As of May 14, US soybean prices were at $420.25 per tonne, soybean from Brazil was priced at $413.75 per tonne, and Indian soybean was the most expensive at $528 a tonne, according to data shared by Paul. For Indian exporters, this price gap remains a challenge.

 

"This tariff war halt between China and US won't prove itself to be helpful to American markets and Indian markets as Brazil continues to be a top supplier to China with cheaper soybean prices," said a commodity analyst from a multinational food and agriculture company, on condition of anonymity.  End

 

US$1 = INR 85.66

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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