Renewed trade concerns stemming from US-China discord on Tuesday pushed soybean futures for July delivery by more than seven percent to $8.415 a bushel, the lowest since March 2009, according to Thomson Reuters.
They traded near $8.64 a bushel earlier in the day.
A war of words between the two countries picked up overnight, following announcements of tit-for-tat tariffs on $34 billion worth of imports late last week. In retaliation against planned US duties, Beijing intends to impose a 25 percent tariff on 545 US goods, including soybeans.
There are a lot of “unknowns and no confidence,” said Rich Nelson, director of research at Allendale, an agricultural market research and trading firm. He added that prices could reverse just as quickly if headlines on trade changed.
More than half of U.S. soybeans go to China, the world’s largest consumer of the beans.
If Beijing imposed a 10 percent tariff on U.S. soybeans, total American soybean exports could drop by 18 percent, according to a study for the US Soybean Export Council by Purdue University agricultural economists Wally Tyner and Farzad Taheripour.
If China implemented a 30 percent tariff, total U.S. soybean exports could fall 40 percent, according to the study, released in late March. Prices would fall 2 or 5 percent over a few years, respectively, under the two different scenarios, the analysis said.
In addition to negative sentiment around the trade dispute, Flynn attributed the drop in soybean prices to dollar strength, which makes US goods relatively more expensive overseas. The US dollar index rose about 0.3 percent Tuesday and is up 5.5 percent this quarter.
“I think ultimately the world is going to buy our beans,” Flynn said. “The demand is there. People have to eat. The decrease in price may offset the fact there might be a tariff.”