An additional commitment of eight million tonnes was announced on social media by U.S. President Donald Trump in the first week of February.

There has been no confirmation of the additional purchases by China or other members of the U.S. administration.

The soybean market has rallied by close to 70 cents per bushel since Trump’s post.

Markets have been driven by a number of factors, including funds buying back their short position in soybean futures.

For the week ending Feb. 10, funds bought back a net of 94,316 contracts (12.8 million tonnes).

They now hold a net long fund position of 123,148 contracts. This is the largest net fund position in soybeans since the end of last year.

Fund buying during the week was not limited to soybeans because soybean oil and canola also benefitted from fund buying.

Net fund purchases of soybean oil were 23,252 contracts, which pushed the fund position to 33,093 contracts net long. This is the largest long position in soybean oil by the managed funds since mid- August of last year.

Funds shift to long on canola

Canola also benefitted from fund purchases during the past week, with funds buying a net long of 42,801 contracts to end up with a long position of 145 contracts.

This is the first long position reported by the funds since the announcement of Chinese tariffs on canola seed in mid-September.

Although the long position by the funds is not substantial, the fact that significant purchases of canola contracts occurred during the week has given the market some momentum.

Fundamentals for the canola market haven’t changed since the announcement of the agreement with China in the middle of January. Chinese purchases have been rumoured, but shipments will only begin to occur in the next few weeks.

Canola cash prices on the Prairies have gained some momentum from the increases in the futures market.

Canola futures are more than $10 per tonne above their value last year at this time. Cash prices are even better with values up by $15 to $20 per tonne.

On many occasions, we blame funds for moving the market downward, but we should remember that this goes both ways.

The main beneficiary of the fund purchases has been soybeans, which have rallied above the US$11.30 per bushel level in the nearby futures contract.

Fund buying last week helped push canola above the C$660 per tonne level in the nearby contract.

Arlan Suderman, chief commodities economist with StoneX Financial, recently told World Grain that the market has priced in an eight to 10 million tonne program to China, but he thinks it could be closer to three to 3.5 million tonnes.

China is by far the top customer for U.S. soybeans. It purchased 25 million tonnes in 2023-24, which was way more than the 6.83 million tonnes consumed by Mexico, which took the second spot that year.

But China isn’t the only player of consequence.

Tony Mellenthin, chair of the United Soybean Board’s export work group, said the U.S. ships soybeans to about 90 countries.

WHY IT MATTERS: Canadian canola prices are tied to U.S. soybean prices.

He said the smaller export program to China has allowed the U.S. soybean industry to put more effort into market development in other countries.

“We’ve been able to enter into these more price-sensitive markets and have really been able to showcase the value of U.S. soy over soy of other origins,” he said during a recent webinar hosted by Agri-Pulse.

There has also been positive policy developments in a couple of markets.

Pakistan recently lifted a ban on the import of genetically modified crops that had temporarily blocked U.S. soybeans from entering what was once a sizeable market.

Mellenthin spoke to a delegation from Pakistan in August who said that U.S. soybeans have a quality advantage that amounts to a US$15 to $20 per tonne premium over Brazilian beans.

In November, soy companies in Bangladesh signed letters of intent to purchase $1.25 billion worth of U.S. soybeans and soybean meal over the next 12 months.

The soybean sector is also getting help from strong exports of other commodities.

Jim Douglas, USB director and former executive committee member of the U.S. Meat Export Federation, said the U.S. shipped out a record three million tonnes of pork in 2024 worth $8.6 billion.

Soybean meal was the primary ingredient fed to those animals.

Export numbers for 2025 have been delayed by the government shutdown, but all indications are that they will be similar to 2024.

The middle class in Asia, South America and Africa are consuming more meat in their diets.

Mellenthin said U.S. soybeans continue to face non-tariff barriers in key markets such as Turkey, Vietnam, South Africa and Bangladesh.

He said the industry needs to keep addressing those market access challenges.

It also needs to take new approaches to expanding consumption in mature markets. That means focusing on the sustainability aspects of U.S. soybeans.

He said customers are still demanding sustainability verification despite the waning policy focus on the environment in the U.S. and other countries.

Douglas was asked about how the industry is dealing with the glut of soybean meal.

He said the U.S. did not really have exportable supplies of soybean meal until recently.

It seems to be a problem that is taking care of itself because livestock producers are increasing inclusion rates in rations as the prices drop.

Mellenthin said there was a big concern a few years ago that the U.S. would have no soybeans to export following all the crush expansion.

However, the expansion was not as extensive as originally contemplated and growers have done a fabulous job of producing the oilseed, so those concerns have been alleviated.

The American Soybean Association and National Corn Growers Association sponsored the report prepared by World Agricultural Economic and Environmental Services.

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The groups said there has been “considerable discussion” about ratcheting up tariffs on U.S. imports of Chinese products.

Former U.S. President Donald Trump has publicly stated on the campaign trail that he would impose a 10 to 20 per cent across-the-board tariff on all imports into the U.S., as well as an additional 60 per cent tariff on all imports from China.

Trump was the architect of the 2018 trade war with China that resulted in US$27 billion in lost U.S. agricultural exports through the end of 2019.

The war came to an end when China and the U.S. signed a Phase 1 Agreement in January 2020, in which China pledged to buy $80 billion of U.S. agricultural products in 2020 and 2021.

The country fell well short of its pledge, buying $59.2 billion over the two-year period of the agreement.

Many of the tariffs China imposed on U.S. agricultural products during the 2018 trade war remain in place, according to the study.

However, China has granted a tariff waiver that has been renewed annually since the Phase 1 Agreement was signed.

“These tariffs could easily be reinstated by China,” the associations said in an article about the new economic study.

The study determined that if China cancels the current waiver and reverts to tariffs already on the books, it would have a profound effect on U.S. exports.

Soybean exports to China would fall 14 to 16 million tonnes annually, an average decline of 51.8 percent from baseline levels expected for those years.

Corn exports would drop by 2.2 million tonnes annually, a decline of 84.3 percent.

“Brazil and Argentina would increase exports and thus gain valuable global market share,” the associations stated in a news release.

The study found that there would be insufficient demand from other markets to make up for the lost sales.

“A new trade war would lead to a steep drop in soy and corn prices, resulting in a ripple impact across the U.S.,” the news release stated.

U.S. soybean prices would fall by an estimated 60 cents per bushel below the baseline forecast, while corn prices would drop eight cents per bu.

If China retaliated with a 60 per cent tariff on U.S. agricultural imports, the impact would be more significant.

That would result in an estimated loss of more than 25 million tonnes of U.S. soybean exports and nearly 90 per cent of its corn sales to China.

Under that scenario, U.S. soybean prices would fall nearly $1 per bu. on average, while the price of corn would drop by 13 cents.

MarketsFarm analyst Bruce Burnett said Canadian grain and oilseed prices are closely tied to U.S. values.

“Everything down there impacts us to some extent,” he said.

Canola would be the crop most directly affected, since it is heavily influenced by U.S. soybean prices.

Lower U.S. corn prices would adversely affect Canadian corn, wheat and barley values, although an eight cent per bu. drop doesn’t seem that much given today’s price volatility, he said.

He feels the same way about the estimated 60 cent per bu. drop in soybean prices.

“That sounds conservative to me,” said Burnett.

Some Canadian crops might fare well under a U.S.-China trade war.

“Back when we had the previous Trump trade war, it actually benefitted Canadian soybean exports and exporters because we shipped a lot more beans to China,” he said.

However, for the most part it would be a net negative for Canadian growers and is something they should consider in their marketing plans for 2024-25.

Contact sean.pratt@producer.com

Near-perfect growing weather in most areas of the world’s top corn exporter and No. 2 soybean exporter boosted bets on big crops, keeping futures prices of both commodities near four-year lows. The lower cost of growing soy versus corn, floods in some areas and a timely winter wheat harvest encouraged farmers to plant more soybeans than last year.

Pro Farmer forecast a soybean harvest of 4.740 billion bushels, which would be about six per cent above the 2021 record and more than the 4.589 billion bu. forecast by the agriculture department. The tour forecast an average soybean yield of 54.9 bu. an acre, after surveying seven states over the past week.

For corn, Pro Farmer estimated a crop of 14.979 billion bu., less than the 15.147 billion seen by the USDA, but a crop that would still be the fourth-largest ever. The tour forecast an average yield of 181.1 bu. an acre.

The four-day tour projected above-average corn yields for six of the seven corn belt states surveyed, except for Minnesota.

“The eastern corn belt was phenomenal. I will never forget this crop year,” said Brian Grete, editor of Pro Farmer and leader of the tour’s eastern leg.