Farmers press experts for answers

March 6, 2025 | Kriss Nelson

Agricultural economists representing soybean, corn and the United States Department of Agriculture (USDA) addressed the current agricultural outlook with an inquisitive crowd on Tuesday during Commodity Classic.

The panel consisted of Scott Gerlt, American Soybean Association (ASA) chief economist; Krista Swanson, lead economist with the National Corn Growers Association (NCGA) and United States Department of Agriculture (USDA) Chief Economist Seth Meyer. Moderating the discussion was Tyne Morgan, host and executive producer for the U.S. Farm Report.

Soybean market outlook

President Trump’s 25% tariffs on goods from Mexico and Canada took effect Tuesday. Canada responded with plans to impose 25% tariffs on nearly $100 billion of U.S. imports over two tranches and Mexico’s president says retaliation could come from them in a few days.

The U.S. added an additional 10% tariff on Chinese imports, compounding the 10% export tax imposed on China a month ago. China soon retaliated, putting a 10% tariff on U.S. soybeans and additional actions that limit market access, which include pulling export licenses on three companies that ship soy.

Farmers are bracing for the potential negative impact on the market, as soybean exports are crucial to the United States soybean market.

During his presentation on the current state of the soybean market, Gerlt put U.S. soybean export numbers into perspective saying half of U.S.-grown soybeans are exported, with 52% of that market going to China and 10% to Mexico.

“If you put those two together, that is almost two-thirds of our foreign soybean demand,” says Gerlt.

As far as soybean meal, Gerlt says 14% of soybean meal is exported to Mexico and 10% to Canada.

Soybean oil could be the one positively affected commodity from the potential trade war.

“We don’t trade much soybean oil; in fact, we import canola oil, used cooking oil and other commodities for biofuels, so we may see a spike in the soybean oil process in a trade war,” says Gerlt.

Domestic crush of soybeans is growing with an expected expansion of domestic crush capacity by 30%.

“This is really good, especially if we are in a trade dispute. We will be able to utilize more soybeans domestically,” says Gerlt. “We have more crush capacity than the last trade war.”

Despite the optimism with the growth of the crush capacity, comes another side: soybean crush margins have fallen significantly.

Gerlt says the rise in soybean crush was driven by some global vegetable oil production and renewable diesel. But recently has dropped to the lowest price it has seen in four and a half years.

“Crush is coming under pressure as well,” he says. “Margins just aren’t good. There is a lot of soybean meal in the market that is being hard to move, and biofuels are coming under pressure.”

Farmers' top concerns

The panel addressed concerns from the audience on tariffs, risk management, biofuels and more during the discussion on the last day of the annual farmer-ran event.

Question:

Rollins had said that no matter what happens with trade, they promised to make farmers whole. Have any discussions started? Have you been instructed to do anything, and what will those payments be like?

Meyer: The secretary has made it clear to us if there needs to be support as we saw in the previous trade friction with China, we should be prepared to formulate what those impacts are.

Question:

What is the value of having year-round E15 and removing some vegetable oil caps in California - the total value of those things versus $10 billion in economic assistance? Where are we better off?

Swanson: In the trade war during the first Trump Administration, we had a slogan of “we want to trade, not aid,” and the same applies in this situation. We want market-driven demand. Farmers don’t want to have to rely on government payments just because the demand isn’t there. When we look at E15 at current gas motor levels, for every 1% increase in average blend grade across the U.S., we could use over 400 million extra bushels of corn.

Meyer: In all executive orders from the president discussing energy, every one of them includes biofuels. We are exporting soybean oil but, at the same time, importing used cooking oil, which is very questionable; in my view, the environmental benefits and whether it is truly used or not are unclear in some origins. For sustainable aviation fuel, we have some challenges in terms of making sure U.S. farmers get credit for their productivity and I think some decisions being made in that area, the science is poor. In my office, we fight until somebody tells us to stop. Right now, no one is telling us to stop, and all of those executive orders contain biofuels when talking about energy.

Gerlt: There are some major issues with California we have been working on. California is the main renewable diesel market. We talk about all of this growth, and it is primarily to be sent to California. They have generally not viewed ag feedstocks very favorably. They tend to give us high carbon intensity scores, so they have been doing some rule-making recently and, on top of that, calling sustainability guard rails to require traceability through the system to be able to point to where that soybean came from. They are capping feedstocks of soybean oil, canola oil and sunflower seed oil at 20% by company for biofuels going into their state. Right now, they are using upwards of 30%. I wish I had a clear path on how this will all play out. Hopefully other states can absorb that extra soybean oil, but it all remains to be seen.

Question:

How important will crop insurance be this year regarding risk management and getting the right policy?

Gerlt: There are programs out there to help. The crop insurance price-setting period was in February. The fixed price of soybeans is at $10.54 per bushel. If you are managing risk, you already know you have $10.50 locked in minus your crop insurance coverage level.

There are also farm bill options with Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC)

The PLC reference price this year will be $9.66 a bushel. Right now, metrics watching for national average cash prices are $9.43. We don’t know what the price will be for the upcoming marketing year, but looking at it today, it triggers PLC payments.

ARC uses a price component using a multi-year average of $12.17 per bushel. There are 86% coverage levels that take it to $10.46; County yield comes into play there, so that can make a difference; that is something to think about, too. ARC has a 10% cap on payments and wouldn’t have SCO (Supplemental Coverage Option).

I think we got extremely lucky with the price rally we had when we had it. That is giving us a lot better base in crop insurance. I think crop insurance should be an important part of risk management in any given year; look at the volatility we are having, talking about markets changing by the minute at this point; this is what the program is designed for.

Swanson: Especially if we stay in a trade war, it could be a situation as we move throughout this year as prices continue to fall and the spring price as a revenue guarantee in those crop insurance programs starts to look positive, putting that protection in place for the farmers buying crop insurance. Especially not knowing what risk might lie ahead could be really important this year.

Meyer: Insurance is not just for crops, it’s for livestock as well. Think about risk management going forward in this environment and those Livestock Risk Protection (LRP) products.

Question:

The talk started a few years ago about how to reduce our dependence on China with a demand for renewable diesel and sustainable aviation fuel, and that hasn’t come to fruition. When you look at the policy in place and the policy shift of sustainable aviation fuel and renewable diesel, can it survive without a policy in place to support it?

Gerlt: No. Not at the same levels. Renewable diesel provides a lot of positive benefits, such as lower carbon emissions and better air quality that are not priced in by markets because it costs more to produce than petroleum. That is why we have the policies. Unfortunately, what has happened is the blend rates were set too low in the last Renewable Volume Obligations (RVO) for 2023, 2024 and 2025. The EPA ignored the actual capacity of biofuels; they said they looked at feedstock availability. What they did not account for is the increase in imports of finished fuels. Used cooking oil surged in the United States because it got routed here. We are up for new blending levels starting next year. That has been delayed; there is an opportunity, hopefully, to right-size some of this. Some fixes could help a lot. We are seeing the stress; we are hearing loud and clear as biofuel plants are idling right now.

Meyer: I think you need to be supported by policy. But, we have problems internationally, too. The International Civil Organization proposal would basically say the Brazilian second corn crop gets a very low carbon intensity score. Alternatively, U.S. farmers get a penalty for indirect land use change in Brazil. It just doesn’t make sense, and we have made that point. We need domestically supported policy, and we need to make sure we are getting a true, real, science-based outcome internationally that describes U.S. farmer productivity.

Swanson: We have to have fair treatment in how these carbon intensity scores are calculated. If we are going to think about corn-based ethanol having a pathway to use in sustainable aviation fuel.

Question:

Without a production disaster in Brazil or the United States, what is our best shot at turning commodity prices around?

Gerlt: I think farmers will respond to market prices. There are still some acre margins that can come in and out and that can help balance some of the supply issue. Beyond that, getting tax credits right for biofuels would be a major help this year. Trade flow – it is not going to help the hole we are in, but it could keep us from digging deeper. The world is flush with soybeans at the moment. Brazil is having a strong harvest, but without a major production shortfall somewhere to offset that, we are going to have to work through some of the supplies in the system.
Swanson: Because the soybean harvest was slower in Brazil, some thought the safrinha corn wouldn’t get planted or planted too late to reach maximum yield potential, but they have seen a surge in planting progress the last few weeks. There is still growing season weather that could result in a production shortfall, but we have to assume now it will be full. No. 1 is the passing of E15 legislation could be positive for corn. And trade deals with market access – if we can find a quick resolution to these tariffs and get a turnaround and work some new trade initiatives that have market access.

Question:

Are we looking at 94 million acres of corn?

Meyer: That is my number until it is not my number. The farmers will get their chance to put their bids in, in March and let the market take another look at that.

Question:

What is one thing you want producers in this room to go home with?

Gerlt: Be looking at crop insurance and farm bill program very carefully this year. We know it will likely be a tougher year, so be doing everything you can to manage that risk this year.

Swanson: Focus on what you can control. You already operate in an uncertain environment all of the time, but there is heightened uncertainty.

Meyer: In my office, we are busy answering every question we can. The secretary (U.S. Secretary of Agriculture, Brooke Rollins) asks us, and we are working hard to give her every answer she wants.

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