Economist Intelligence Unit maintains 2025 soybean price forecast at US$403/tonne, but warns tariffs could weigh on prices; 2025/2026 US crop is harvested September-October around peak export season, and high tariffs would dampen domestic prices

April 29, 2025 (Country Analysis Advanced: Commodity Forecast) –

Stocks and prices

EIU expects soybean prices to remain relatively flat during the first half of 2025 before weakening in the second half of the year. We forecast prices (US No. 2 Yellow Soybeans, fob Gulf ports) of US$403/tonne on average in 2025, down by 8.3% year on year, which follows a much larger decline in 2024 of 20.9%.

Despite a modest deterioration in production prospects since the start of 2025, we expect ample supply to weigh on soybean prices in 2025, as in 2024. A bumper northern hemisphere harvest was completed by end-2024, and a large southern hemisphere crop began in January 2025. We estimate that production will exceed consumption by 8.7m tonnes in the 2024/25 season, the largest surplus in six years. This is a smaller surplus than we had stipulated in our previous report, as we have trimmed our estimate for Argentina's current 2024/25 soybean harvest by 1m tonnes and raised our forecast for consumption in China by 1.5m tonnes. A further, albeit smaller, surplus of 6m tonnes in the 2025/26 season should drag prices down to US$395/tonne in 2026, the lowest annual average level since 2020. We have narrowed our surplus forecast for 2025/26 owing to a combined reduction of 4m tonnes to our US and Argentina forecasts, which was only partly offset by a 3m increase to our forecast for Brazil. Although prices have been declining steadily since 2022, they will remain above pre-pandemic levels. Our average price forecast for 2026 is 6.5% higher than the average for 2015-19.

Retaliatory tariffs on US soybean exports will weaken US prices

Escalating tariffs on US soybean exports will accelerate ongoing shifts in global trade flows and put pressure on US soybean prices. Counter tariffs on various US exports, including soybeans, commenced in early March. Most significantly, China's measures came into force on March 10th, with soybean tariffs up by 10%. On March 12th the EU announced plans to implement tariffs in April. Tariffs on US soybean exports are expected to rise further by the end of 2025. We expect US tariffs to continue rising under Mr Trump, especially on Chinese products, which would likely encourage additional countermeasures against US soybean exports.

On April 2nd Mr Trump announced a new reciprocal tariff policy, applying a baseline 10% tariff on imports from all countries, with additional tariffs on about 60 countries. Of all the US's trading partners, China faces the highest tariffs. US tariffs on Chinese goods had already increased by 20 percentage points since the start of Mr Trump's second term. The April 2nd tariff announcement, together with other sectoral tariffs, brought China's weighted average tariff rate (WATR) to 63%. This prompted China to respond on April 4th with 34% tariffs on US goods. On April 7th Mr Trump raised tariffs on Chinese goods to 50%, and on April 9th, China retaliated with 50% tariffs on US goods. However, Mr Trump announced on April 9th that he would pause reciprocal tariffs for 90 days on countries that did not retaliate against his levies, but maintain a 10% universal tariff. The US WATR on China is now around 123%, and China's WATR on the US is around 103%. The global economic shock from implementing these tariffs will be substantial. We forecast a sizeable slowdown in both the US and global economies, which will feed into our commodities forecasts in subsequent rounds as the fallout becomes clearer.

The tit-for-tat trade war, with US soybeans a key target, will encourage buyers to shift away from US suppliers and disproportionately affect US soybean prices relative to global competitors. Several factors will limit the impact of tariffs on soybean prices during the first half of 2025. First, the reaction to China and EU tariffs announced in March was modest, reflecting that these countermeasures have long been anticipated. Second, March to August will be the seasonal low point for US exports from the 2024/25 soybean crop, which was harvested by October 2024. China and other importers source most of their soybeans from South America during this period, mainly from Brazil, where harvesting of the record 2024/25 crop began in January 2025. Third, many US soybean cargoes contracted before the tariffs announced by China and the EU in March are likely to be exempt.

Soybean prices will come under significant pressure if tariffs persist through 2025 and into 2026. The US 2025/26 soybean crop will be harvested between September and October, with export sales typically peaking in October and November. This is the period when high tariffs on US exports could have a considerable negative impact on US domestic soybean prices by diverting demand to alternative suppliers. The high risk of tariffs escalating above our core scenario means that there are downside risks to our US soybean price forecasts.

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Global soybean stockpiles rebounded from multi-year lows in the completed 2023/24 season, and this trend will continue over the next two seasons. The different production calendars for the world's largest soybean growers make it hard to gauge the true levels of global stocks, as does the lack of transparency over inventories in China, which is assumed to have the world's largest soybean stockpiles. Nonetheless, the global stock/use ratio was estimated to be near a multi-decade low of 11.5% at the end of the 2022/23 season. We estimate that the ratio recovered to 12.9% in the completed 2023/24 season, and expect it to climb to 16.5% in the 2024/25 season and 17.7% in the 2025/26 season, significantly above the 2013/14-2022/23 average of 14.1%.

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Demand

Falling soybean prices will sustain strong demand growth in the 2024/25 season. Global soybean consumption has set a record high every year since 2011/12, buoyed by stronger food, feed and industrial uptake.

We forecast that world soybean consumption will increase by 5.3% year on year to 404m tonnes in 2024/25, supported by lower prices, following estimated growth of 4.5% in 2023/24. This is 1.5m tonnes higher than our previous forecast, as we have raised our China consumption figure. With soybean prices set to decline again in 2026, we forecast that world consumption will grow by a further 1.6% to more than 410m tonnes in 2025/26.

Soybeans are mainly used for animal feed, especially for pigs and poultry, and increasingly for aquaculture. Fuelled by rapid growth in China, about three-quarters of global soybeans are crushed and ultimately fed to livestock. An estimated 13% is crushed for soy oil, which is used in a range of food products such as margarine, salad dressings and cooking oil. A further 6% is channelled into industrial uses, mainly for producing biofuels, including biodiesel and renewable diesel. Increasing policy support for biodiesel in various large economies, including the US, Indonesia, India and Brazil, means that soybean demand for biodiesel production will rise significantly over the medium term.

Rising tariffs will reduce China's imports of US soybean

China's annual soybean consumption typically accounts for about 30% of the global total. Soybean meal is used predominantly as high-protein pig feed, with substantial amounts also channelled into the poultry, dairy and aquaculture sectors. Following an aggressive expansionary drive as the local industry adapted to the aftermath of the devastating African swine fever outbreak that began in 2018, an oversupply of pigs weighed on hog prices in 2023/24. The oversupply has eroded producer profit margins, triggering herd destocking to save on feed costs. We therefore forecast subdued growth in China's soybean demand by historical standards after 2024/25.

We expect a 4.5% year-on-year rise in Chinese consumption to 126.5m tonnes in 2024/25 and a 1.2% contraction in 2025/26, after an average annual increase of 4.8% in 2022/23-2023/24. Expectations of retaliatory tariffs on US soybeans during 2025 encouraged Chinese buyers to front-load shipments from the US into the first quarter. US soybean exports to China increased strongly in the first two months of 2025 and the resulting stockpile build will weaken soybean prices in China during the first half of 2025, while boosting consumption. In the longer term, rising Chinese tariffs on US soybeans will encourage a continued shift away from US soybean imports, increasing costs for Chinese importers and slowing demand growth. The US's confrontational trade policy will also weaken economic growth in China, further dampening demand.

As exports weaken, biofuel will increasingly drive US demand

The US is the world's second-largest consumer of soybeans. Growing demand from the biofuel segment has caused the US crushing industry to shift its primary focus gradually towards soybean oil, rather than crushing soybeans for meal. We expect another year of above-average growth in processing demand in 2024/25 and overall consumption of a record 69m tonnes, up by 4.5% on the previous year. Similarly to the past few years, growth will mainly be driven by the planned expansion of renewable diesel capacity, which will use an increasingly large share of soybean oil. US biodiesel production capacity has increased more than fourfold since 2021. Biofuels now account for half of US soybean oil consumption, up from less than 40% five years ago. Bioethanol, produced from corn, has traditionally dominated biofuel production in the US, accounting for more than 90% of output as recently as 2018, when bioethanol production peaked. However, we estimate that production of soybean oil-based alternative fuels such as renewable diesel and biodiesel exceeded ethanol in 2024, having surged since 2018. Given the significant increase in capacity and low carbon fuel standards in several US states, notably California, we expect sustained growth in demand for soybean oil from the fuel sector over the medium term. We forecast a rise in US soybean consumption of 5.8%, year on year, to 73m tonnes in 2025/26. Reduced federal support for renewable energy standards under the Trump administration poses a downside risk. Nonetheless, domestic demand will be an increasingly important driver of the US soybean market as China continues to diversify away from US suppliers.

Brazil's biodiesel blending rates will affect the global soybean market

Brazilian soybean demand continues to increase owing to rising soybean oil and meal consumption. Domestic consumption is underpinned by a national biodiesel blending mandate, which is currently set at 14% (B14), and had been scheduled to rise to 15% in March, although this was temporarily suspended due to concerns over food price inflation. With soybean oil accounting for about 70% of the overall feedstock, each percentage-point increase in the mandate will require an additional 1m tonnes of soybeans for crushing. Although the local crushing industry has more than sufficient capacity to meet these higher blends, the additional supplies needed could divert some whole soybeans away from export channels. Strong demand for Brazil's exports of soybean products, such as soybean oil, has supported local soybean consumption in recent seasons. Product exports have been boosted by the relative weakness in the local currency, and diminished competition from Argentina and the US. We expect Brazil's soybean consumption to rise by 5.2% to 61m tonnes in 2024/25 and by 1.6% to 62m tonnes in 2025/26.

Processing demand in Argentina will continue to rebound rapidly

Argentina's consumption rebounded by an estimated 16.9% to 42.8m tonnes in 2023/24 as local production surged. Crushed products are mostly directed towards export demand. Supported by a continued increase in production, we expect a further rise of 15.7% in 2024/25 to 49.5m tonnes. There are slight downside risks to this forecast from the government of Argentina's decision to temporarily reduce export taxes on soybean and soybean products in the first quarter of 2025 to lend financial support to farmers, many of whom are still battling drought conditions. Reduced export taxes will make foreign sales more lucrative than domestic sales, potentially diverting some soybean from the local market and reducing domestic consumption.

Amid stiffer Brazilian and US export competition, particularly for soybean meal, the local industry is investigating avenues to boost its sustainability credentials, including a major traceability scheme that is partly designed to ensure that products meet EU deforestation regulation. In October 2024, the EU announced plans to postpone the implementation of its deforestation regulation from the start of 2025 until the beginning of 2026.

World trade continues to expand, led by China

Soybean is by far the world's most traded oilseed, with trade forecast at 172m tonnes in the 2024/25 trade year, an annual increase of 1.7%. We expect total trade to rise by a further 1.7% to 175m tonnes in 2025/26. Soybean trade is dominated by China, which accounts for about 60% of the global total.

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Supply

World soybean production continues to trend higher owing to steady increases in area and yields. Much of the upswing in production over the past five years has been due to a sustained surge in output in Brazil, which now accounts for nearly 40% of the world total. A strong US harvest over September-November 2024 kept global markets well supplied until end-2024, and a bumper 2024/25 South American harvest began in January 2025. Although recent declines in soybean prices will be a disincentive for 2024/25 plantings (there were lower US plantings for example), we expect global production to grow again in 2025/26.

Low prices will discourage plantings in large producers such as the US

We expect that global soybean production will increase by 6.0% to about 412.5m tonnes in the current 2024/25 season, which we have revised down by 1m tonnes from our previous report in the light of adverse weather.

We estimate US soybean production increased by 6.8% to 121m tonnes in the 2024/25 crop, which was harvested during the second half of 2024. This would be the second-largest US harvest after 2021/22. We forecast that US soybean output will decline by 2.5% to 118m tonnes in 2025/26, owing to the negative effect on farmer production incentives of lower prices and reduced export opportunities to China. On March 31st the US Department of Agriculture released its first plantings projection, wherein it forecasts 2025/26 acreage to decline by 4.0%, mainly due to a 5.0% increase in corn plantings.

Depreciation of the Brazilian Real will encourage farmers to boost exports

We forecast that Brazil's production will rise by 10.6% to 165m tonnes in the 2024/25 crop, the harvesting of which began in January 2025. Depreciation of the real exchange rate will encourage farmers to maximise export potential to earn US dollars. The unit averaged about R5.84:US$1 in the fourth quarter of 2024 during the planting window, compared with R4.95:US$1 at the start of 2024. Despite a modest recovery, the exchange rate is forecast to average R5.74:US$1 in 2025. We have increased our forecast for Brazil's production in the 2025/26 season by 3m tonnes, prompted by optimistic early projections from the US Department of Agriculture's local attaché, which expects 2.0% growth. We forecast output to increase by 1.2% to a record 167m tonnes, encouraged by strong demand from buyers including China, the EU, and Mexico following retaliatory tariffs on US soybeans.

Drought has reduced Argentina's production potential in 2024/25

In Argentina, we have revised down our forecast for the ongoing 2024/25 harvest owing to the negative effect on plantings and seed development caused by dry weather since January. We now expect production to decrease by 1.0% to 49m tonnes, down from our previous forecast of 50m. In March, the Buenos Aires Grains Exchange reduced its forecast by 1m tonnes to 48.6m tonnes. We forecast a 2.0% rebound in soybean production to 50m tonnes in 2025/26.

Government efforts to aid food security will boost China's output

Soybean production in China will grow gradually in the coming years, supported by government efforts to improve food security. We forecast that output will rise by 1% in 2024/25 and 1.9% in 2025/26, pushing it to record highs. Deteriorating relations with the US have accelerated policies to increase domestic soybean production by introducing higher-yield varieties and expanding planting areas. The China Agricultural Outlook 2024-33 report, released by the Ministry of Agriculture and Rural Affairs, forecasts that increased domestic soybean production will reduce imports from 99.4m tonnes in 2023 to 78.6m tonnes by 2033.

Surging demand for edible oils drives production in India

Fuelled by surging demand for edible oils, the soybean area in India has increased rapidly since the commodity was first introduced in the late 1960s. Many farmers favour soybeans over alternatives, including cotton, owing to a shorter growth cycle and reduced moisture needs. Although yields have improved, average productivity is only about one-third of the levels achieved in the US and South America. Most of the crop is crushed domestically, with annual soybean meal exports ranging from 400,000 tonnes to 2.4m tonnes over the past decade. We forecast a gradual recovery in India's output over 2024/25 and 2025/26 to just shy of the 2022/23 level.

A potential Russia-Ukraine peace could boost Ukraine's soybean output

Soybean production in Ukraine is in an expansionary phase, with output expected to reach a record 5.8m tonnes in 2024/25. Soybeans are mainly produced in central and western Ukraine, away from the conflict zones, with most of the produce directed to export channels. Amid competitive prices and local freight advantages, Ukraine has expanded exports to the EU, Turkey and Egypt, with annual volumes recently exceeding 3m tonnes. The increase in exports to North Africa and the Middle East has displaced some shipments from traditional origins, including the US. A potential end to the Russia-Ukraine conflict in 2025, for instance, through a possible US-brokered peace deal, could facilitate increased soybean production and exports by improving farmers' access to credit and export infrastructure.

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