Soybean Prices Rebound Amid Trade Tensions, China Shifts to Brazil

Soybean prices rose due to short covering and technical buying, with market participants closely watching Argentina’s uncertain weather and Brazil’s advancing harvest. The USDA will release new supply and demand estimates on March 11, followed by Brazil’s CONAB on March 13. Despite China’s retaliatory tariffs, old-crop U.S. soybean demand remains largely unaffected, though China continues favoring South American supplies.

The U.S. agricultural sector faces growing uncertainty after the White House imposed new tariffs on Mexico, Canada, and China, prompting retaliatory measures. These three countries accounted for over 60% of U.S. soybean exports in 2024. Retaliatory tariffs further threaten U.S. market share, already declining due to South American competition. Experts warn that prolonged trade disputes could permanently shift global trade flows.

On March 4, the U.S. raised tariffs to 25% on most imports from Mexico and Canada and 20% on Chinese goods. In response, China imposed additional levies, including a 10% tariff on soybeans, and suspended import licenses for major U.S. exporters. Canada also announced a 25% tariff on over $20 billion of U.S. goods, with Mexico set to reveal countermeasures on March 9.

Commodity prices have already reacted, with soybean futures losing 9% since mid-February. However, despite trade tensions, soybean prices rebounded on March 6, gaining 5-12 cents, while soybean meal and oil prices also increased. Meanwhile, China’s National Development and Reform Commission is exploring ways to reduce soybean meal usage in animal feed, which could potentially impact future demand.

China’s agricultural markets experienced volatility, with soybean meal futures dropping due to profit-taking. In response, China escalated trade measures by suspending U.S. soybean import licenses. These restrictions, combined with tariffs on $2.1 billion worth of U.S. agricultural products, underscore China’s strategic shift away from U.S. imports.

China’s long-term goal of reducing reliance on U.S. agriculture has accelerated. Once the top U.S. agricultural market, China now imports more from Brazil, which exports over $50 billion in agricultural goods to China annually compared to less than $30 billion from the U.S. This shift, driven by trade wars and growing domestic production, pressures U.S. farmers. Industry leaders warn that renewed trade disputes could harm U.S. farmers, who have yet to recover from previous tariff battles.

Analysts expect China to continue prioritizing Brazilian soybeans, especially as Brazil harvests a record crop. Agribusiness consultancy Celeres slightly lowered its Brazilian soybean production estimate but still expects a record-high crop.

Despite a temporary price rebound, market pressure persists. Analysts forecast potential declines toward $978.10 per bushel if key support levels break. The coming weeks will determine whether policy shifts or market fundamentals drive further movements.

Data for Technical Analysis (1D) CFD US Soybeans Futures - May 25 (ZSK5)

Resistance : 1013.86, 1018.05, 1024.83

Support : 1000.30, 996.11, 989.33           

1D Outlook  

Source: TradingView 

Buy/Long 1 If the support at the price range 990.30 - 1000.30 is touched, but the support at 1000.30 cannot be broken, the TP may be set around 1018.29 and the SL around 985.30, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1013.86 – 1023.86, TP may be set around 1036.00 and SL around 995.00, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1013.86 – 1023.86 is touched, but the resistance 1013.86 cannot be broken, the TP may be set around 1000.30 and the SL around 1028.86, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 990.30 - 1000.30, TP may be set around 978.00 and SL around 1019.00, or up to the risk appetite.       

Pivot Points Mar 6, 2025 02:49AM GMT