CHICAGO — US soybean futures plunged 2.5% to a one-year low on Friday on concerns that escalations in a trade fight with China would threaten shipments to the biggest buyer of the oilseed, traders said.
US President Donald Trump announced hefty tariffs on $50 billion of Chinese imports on Friday, with collection beginning on July 6. China hit back, with its commerce ministry saying it will impose 25% tariffs on 659 US goods worth $50 billion in response, including soybeans starting July 6.
“We’ve spent much of the last couple months expecting this to be saber-rattling and something that would be resolved far before actual action takes place,” said Angie Setzer, vice president of grain at Citizens LLC, a grain elevator in Michigan. “But here we are.”
Trade concerns also weighed on the corn market as Mexico could strike at $4 billion in annual imports of US corn and soybeans if Trump escalates a trade spat with new tariffs, officials told Reuters this week.
Corn futures sank to their lowest in more than five months before recovering some of their losses.
US Agriculture Secretary Sonny Perdue, speaking on a conference call from Canada, said the United States has tools such as the Commodity Credit Corporation to aid farmers whose incomes are harmed by trade fights.
But he said it is too soon to assess such damage or how the government might respond.
“You can’t demonstrate any damage on the day that tariffs are announced,” Perdue said. “We’re going to look at this very carefully. We have been calculating market impact on a weekly basis for a number of months now.”
Asked whether declines in soybean prices demonstrate that farmers are already casualties of US trade wars, Perdue said that was unclear.
“Commodities are always in a roller coaster. I don’t think we can think we can definitely say this has been part of the trade disruption the last few weeks.”
Soybean futures have fallen for nine of the last 10 sessions as the rhetoric between China and the United States has heated up.
Forecasts for good weather around the US Midwest added to the pressure on corn and soybean futures as crops near key development phases. — Reuters

MEXICO CITY — Mexico could strike at $4 billion in annual imports of US corn and soybeans if President Donald Trump escalates a trade spat with new tariffs, officials told Reuters this week, and it is studying how to reduce the pain of such a move.
Earlier this month, Mexico swiftly retaliated when Trump imposed metals tariffs, hitting dozens of American imports including steel, apples and pork.
But it held back from the most lucrative class of US farm products: grains, especially feed corn and soybeans, used to fatten Mexico’s cows, hogs and chickens.
Imposing such tariffs would be a last-ditch option hitting at US corn farmers’ top export market, and such a move would hurt Mexico’s own industry. But it has already been increasing its imports of grains from suppliers like Brazil and Argentina that could enable it to lessen the impact.
“This issue is one for phase two,” said Bosco de la Vega, who heads Mexico’s main agricultural lobby, the National Farm Council. He said tariffs on grains were discussed at a June 4 meeting he attended at Mexico’s Economy Ministry, which is in charge of trade. Economy Minister Ildefonso Guajardo was present at the meeting, he said.
“Intentionally, it was left for a major crisis phase,” said De la Vega.
He said any move against grains would aim at the US corn belt, mentioning states such as Missouri, Kansas, Iowa and Nebraska, all of which voted for Trump in the 2016 election.
Raul Urteaga, director of international trade for Mexico’s agriculture ministry, said Mexico “right now” was not targeting US grains, but declined to rule out such a move in the future and said Mexico was looking for alternative suppliers.
An official with Mexico’s Economy Ministry would not say whether or not officials were studying duties on US grains, and referred back to the retaliatory tariffs announced earlier this month.
The decision not to impose the measure during that retaliation was taken to retain options at the negotiating table as trade talks continue and to avoid hurting the Mexican consumer with higher prices, a trade source familiar with the matter said.
High on Mexico’s list of worries is Trump’s decision to launch a national security investigation into tariffs on auto imports, which could hammer Mexico’s $67-billion auto industry.
“That’s why we’re preparing,” De la Vega said.
Urteaga, one of Mexico’s original North American Free Trade Agreement negotiators in the early 1990s, cited two trade missions he organized along with 17 Mexican grains buyers to Brazil and Argentina last year, aimed squarely at developing substitute US suppliers.
“I want to emphasize that both yellow corn and soybeans represent very interesting areas of opportunity for Argentina and Brazil as alternative suppliers for us,” he said.
“I’m emphasizing South American (imports),” he added, “simply because that’s what’s most viable right now.”
Over the past couple of decades, cheap US grains have helped transform Mexico’s growing beef sector, in particular, into a major global exporter.
If retaliatory Mexican tariffs were imposed on soy and corn the industry would scramble to find enough alternative suppliers without significantly higher costs. Some in Mexico don’t believe it can be done without inflicting serious damage.
“There’s no real possibility of substituting these two products in the short-term. The impact on the pork and beef industries in Mexico in terms of costs would be brutal,” said Mariano Ruiz-Funes, a former deputy agriculture minister.
De la Vega said the possibility of opening a broad duty-free quota to attract imports from other suppliers and offset the higher cost of US grains was being evaluated with the Economy Ministry, which did the same with pork last week.
The immediate beneficiaries could be Brazil and Argentina, countries from which Mexican importers are already buying more grains both for economic reasons and as part of a re-energized strategy to reduce dependence on the United States since Trump began threatening to scrap NAFTA.
During the first quarter of this year, Mexico imported some 107,000 tons of yellow corn from Brazil worth an estimated $17.5 million, and about 74,000 tons of soybeans totaling some $31 million, according to Mexican government data.
Both are up from zero during the same period last year.
De la Vega said he expects feed corn imports from Brazilian farmers to reach 1 million tons by the end of the year, plus another 500,000 tons from Argentina.
Those volumes do not come close to replacing US shipments. Last year, American farmers sold their southern neighbor some 14 million tons of corn and almost 4 million tons of soy.
“Any disruption to this critical trade through tariff or non-tariff barriers would be detrimental to US farmers, Mexican livestock producers and ultimately consumers,” said Ryan LeGrand, head of the Mexico office for the US Grains Council. — Reuters