Soybeans – Every Action has an Equal and Opposite Reaction?  

Written for Sevita by Bailey Elchinger, Risk Management Consultant and Regional Director, FCM Division of StoneX Financial Inc.

The Initial Action

The bean market ended the month of March with the USDA stocks/acreage report. This report showed 83.5 million acres of beans getting planted in 2025. On the day of the report the market ended the day up nearly 20 cents a bushel as the pre-report average trade estimate was for more than 84 million acres to be planted. When utilizing 83.5 million acres in a potential supply/demand table for 2025 it’s easy to see that – assuming increased demand - we will need to put together a good national yield to keep carryout above 200 million bushels. While I don’t view this as wildly bullish it also didn’t appear to be all that bearish. 

The idea of putting tariffs on the World’s largest buyer of soybeans and the fear that they would, in-turn, place reciprocal tariffs on the U.S. was enough for the front-month contract to sink to lows we hadn’t seen since mid-December. This type of move led many to believe the bean story was ‘over’, despite the smaller acres we received in the March 31st report. 

The bean market quickly rebounded after ‘Liberation Day’, as the Trump administration called it. This puzzled many analysts, as many had linked a tariff war to weaker bean futures.  Part of the reason for the rebounding bean market strength was believed to be index funds wanting to own commodities. Commodities are often seen as a ‘safe’ investment for those traders – possibly a hedge against inflation. This leads me to believe that at least part of our rally was on the backs of money flowing into the commodity sector. Another portion of the bounce was likely the weakness in the U.S. Dollar. Many believe that the weak dollar, which makes our exports ‘cheaper’ to the World, helped the market rally, the “proof” being that the U.S continued to make export sales to “unknown” destinations. Many assume that ‘unknown’ is China. Many noting that IF the Chinese government were to import beans from the U.S., they likely wouldn’t pay the tariff to themselves and could simply put them into their reserves to be sold later when they are needed. 

Another source for optimism in April was the overall positive rhetoric surrounding biofuels from the Trump administration. Early in the month the U.S. Environmental Protection Agency (EPA) met with several U.S. biofuel and oil groups. The discussion was focused on raising federal mandates for biodiesel blending. The meeting signals the EPA may be close to releasing guidelines for at least the next two years. The coalition pushed to increase biomass blending requirements to 5.5-5.75 billion compared to the current 3.55 billion requirement today. The coalition has felt some backlash, first from small refiners and also from truck stop operators and fuel retailers who feel an increased mandate may increase prices at the pump if no blenders tax credits are enacted. This discussion also came at a time when the market was lacking clarity on the future biofuel products and was seen as a step in the right direction for long-term domestic commodity demand. 

 The tariff fears didn’t seem to last long for commodities in general. It was quickly announced that a significant number of countries had approached the Trump administration about negotiating. This eventually led President Trump to reduce the overall tariff rate significantly for most countries – except China. Not only did this seem to calm some fears in the equity/outside markets, it also eased fears for the grains and oilseeds. While he eased tariffs on many countries, the Chinese tariffs were ratcheted higher as China refused to negotiate. 

Mid-April we received the USDA’s April Supply/Demand report which gave us a look at old crop demand thoughts from the USDA. Very few changes were made, still leaving the 24/25 US bean carryout at a whopping 375 million bushels.