U.S. soybean exports risk 20% drop without improved China deal

U.S. soybean exports may drop 20% and prices will plunge if the United States and China fail to resolve their trade dispute limiting U.S. soybeans from their largest market, agribusiness consultancy AgResource said on Wednesday.

The temporary truce in the U.S.-China trade war, announced on Monday, would not help U.S. farmers revive soy sales in China as Chinese duties, even reduced to 10% from 145%, remained too high to make U.S. soybeans competitive, analysts and exporters said on the sidelines of the GrainCom conference in Geneva.

U.S. soybean exports could slump to 1.5 billion bushels from an initial estimate of 1.865 billion without a substantive deal, AgResource President Dan Basse said.

Meanwhile U.S. corn exports could shed 13% to 2.4 billion bushels, he said.

"It's important that any U.S.-China trade deal happens by late summer or the export forecast will become reality, pressuring U.S. farm income. The clock is ticking," Basse told Reuters.

Prices would also take a hit. In the absence of a deal, Basse sees U.S. soybean futures on the Chicago Board of Trade falling as low as $9 per bushel, compared to $10.6 a bushel traded on Wednesday. 

In contrast, if a deal brought tariffs back to their previous level, soybean prices could surge as high as $13 a bushel, he added.

"We are creating a major advantage for other origins, mainly Brazil, and origins like Argentina," Alejandra Casillo, president of the North American Export Grain Association, told Reuters, adding that even a 10% tariff would halt U.S. grain exports to China.

China has been a critical market for U.S. farmers, representing more than half of U.S. soybean exports in the most recent marketing year.

However, American farmers worry the tariff pause will not be enough to help them, as Brazil, the biggest soy supplier to China, has ample supplies from a record harvest, lower prices, and its farmers do not face any Chinese tariffs. 

China, the world's largest crop importer, already sources roughly 70% of its soybean imports from Brazil.

Corn and wheat would fall as low as $3.70 for corn from $4.40 on Wednesday, and $4.90 from $5.56 for wheat, he said