Soybean Losses Continue Despite Assistance

Soybean Farmers Need Finalized Biofuel Policies & Greater Economic Assistance Given Historic Export Losses to China

By Scott Gerlt, PhD

Soybean farmers in the United States are experiencing an extremely difficult crop year. The 2025 harvest is projected by the U.S. Department of Agriculture (USDA) to be the most expensive soybean crop ever on a per acre basis[1]. Concurrently, geopolitical factors undermined soybean demand, suppressing prices received by farmers. These factors combined leave soybean producers with a third straight year of significant market losses[2]. Soybean farmers have been at the tip of the spear in international trade turmoil yet have received very low assistance rates to help absorb this loss. Beyond direct assistance, strong Renewable Fuel Standard levels and finalized biofuel tax credit guidance would bolster domestic demand.

Soybean Farmers Have Suffered Historic Export Losses and Shifting Goalposts on China Purchase Commitments

Global trade issues for soybeans started in February with tariffs placed on China, Canada, and Mexico under the International Emergency Economic Powers Act (IEEPA). China responded with a 10% additional tariff on U.S. soybeans and a 10% universal baseline tariff on all U.S. exports, bringing U.S. soy's tariff differential to 20%. Tariffs from both countries escalated until Oct. 30 when Presidents Trump and Xi met in Busan, South Korea.

From the end of May 2025 to the end of November, the U.S. exported no soybeans to China. During this time, China depended on Brazil to continue imports[3]. Additionally, the U.S. government announced negotiations on a $20 billion currency swap to Argentina in September. Following the currency swap, Argentina immediately suspended its export tax on soybeans and sold 5.1 million metric tons (MMT) to outside buyers , primarily to China, in two days. This helped China avoid purchasing U.S. soybeans for even longer.

According to the White House, the Busan summit resulted in Chinese purchase commitments for U.S. soybeans. Initially, the White House fact sheet and statements by Treasury Secretary Bessent communicated that "China will purchase at least 12 million metric tons of U.S. soybeans during the last two months of 2025 and also purchase at least 25 MMT of U.S. soybeans in each of 2026, 2027, and 2028."[4] More recently, however, the goalpost for these purchases appears to be shifting, with Treasury Secretary Bessent and U.S. Trade Representative (USTR) Ambassador Greer indicating that the 12 MMT of purchases is to be completed by the end of February or even "this season". If indeed the 12 MMT is all that is purchased this marketing year for soybeans (Sept. 1, 2025, to Aug. 31, 2026), that would represent about a 50% drop from export levels to China during the previous two marketing years.

About 9.4 MMT of sales have been confirmed to date in official USDA data, although sales reporting lags actual sales. For the prior two years, China had purchased an average of 20.4 MMT by this point of the marketing year. Despite the availability of U.S. soybeans, all other destinations, including those that have not yet identified the destination country, are only up 20% or 4.0 MMT from the prior two years. Soybean export sales have now only caught up to the levels experienced during the 2018/2019 to 2019/2020 trade war. With the export window rapidly closing over the next two months for U.S. soybeans, the geopolitical issues severely stymied a critical component of demand.

[1] https://www.ers.usda.gov/data-products/commodity-costs-and-returns

[2] https://soygrowers.com/news-releases/the-rising-cost-squeeze-soybean-farmers-face-a-third-year-of-losses/

[3] https://soygrowers.com/news-releases/unfilled-chinese-soy-demand/

[4] https://www.whitehouse.gov/fact-sheets/2025/11/fact-sheet-president-donald-j-trump-strikes-deal-on-economic-and-trade-relations-with-china/

Soybean Farmers Need Biofuel Policies Finalized to Boost Domestic Demand for Soybeans and Soybean Oil

Growing domestic biofuel use has been a bright spot for the soybean industry. The U.S. crush industry has expanded by several hundred million bushels over the past few years to supply increasing amounts of soybean oil[1]. However, the biomass-based diesel industry faltered in early 2025 and soybean oil used in biofuel production dropped by about half. The lack of clarity in 45Z Clean Fuel Production Credit guidance and low renewable volume obligations (RVOs) caused many biodiesel facilities to idle.

The RVOs determine how much biomass-based diesel is consumed in the United States. It is one area where the Administration has an easy and quick method to increase soybean demand. EPA proposed blending levels for 2026 and 2027 in June of 2025 but has not yet finalized the rule.

EPA estimates their proposal would increase minimum BBD blend levels by 67% from 2025 to 2026[2]. If achieved, this increase would energize biofuel markets with robust demand. It would also provide certainty to the same markets for the next two years. EPA assumes that almost 200 million bushels per year of additional crush would be supported through the RVO.

The RVO proposal included an additional feature that would also provide a shot in the arm to soy markets. Imported biofuels and biofuels produced from imported feedstocks would receive half the Renewable Identification Number credits compared to domestic biofuels produced from domestic feedstocks. The California Low Carbon Fuel Standard (LCFS) program incentivizes use of feedstocks deemed as "waste," such as used cooking oil and tallow. The relative profitability led to a dramatic increase in their importation. In early 2025, UCO imports for biofuels almost equaled soybean oil used in biofuels. Domestic soybean oil essentially became the residual feedstock for biofuels.

Restricting credit for foreign fuels and biofuel feedstocks helps restore domestic soy as a preferred feedstock. A study funded by the United Soybean Board showed that removing the proposed half Renewable Identification Number (RIN) credit restriction would reduce soy farmer cash receipts between $500 million and $2.1 billion per year, depending on the year and how EPA handles adjusting the corresponding obligations[3]. Soybean oil use in biofuels would also fall between 200 million pounds per year to 3.3 billion pounds per year. Imports of UCO and tallow would increase by more than 2 billion pounds in all cases.

Additionally, the biofuel industry awaits final rules on the 45Z tax credit. The credit was first established in the Inflation Reduction Act in 2022 and was supposed to go into effect for on-road biofuels in 2025. Final guidance has never been released. The One Big Beautiful Bill Act in 2025 made several improvements to the tax credit by removing the indirect land use change penalty assigned to several ag feedstocks and limiting the tax credit to domestic feedstocks. The lack of final guidance continues to plague soybean oil markets as many biofuel companies have struggled to utilize the credit. The faster final guidance is released, the sooner biofuel producers can fully incorporate the incentive.

Economic Assistance Being Provided Under USDA's Initial Farmer Bridge Assistance Program Is Disproportional to Soybean Farmer and Crop Trade Losses

Strong biofuel policies can help dampen the lost export opportunities but cannot fully absorb the loss. If China only purchases 12 MMT of U.S. soybeans this marketing year, that will be 11.8 MMT less than has been averaged the past two years. This is about 430 million bushels compared to the 200 million bushels growth that EPA assumed would be supported by the RVO. While other countries have imported more U.S. soy this year, that is largely a shift along the demand curve due to lower prices for U.S. soy.

Due to this loss in demand from geopolitical issues, soybean farmers have suffered real losses. While it is too early at this point to fully quantify the impact of lost sales to China, during the previous trade war, research showed that soybeans accounted for 71% of the losses at $9.4 billion annually[4]. Despite this, soybeans only ranked ninth in terms of payment size per acre in the recently announced Farmer Bridge Assistance program[5]. Even when total market losses, upcoming farm bill Price Loss Coverage (PLC) payments, crop insurance, and Farmer Bridge Assistance are included, soybeans still face a loss of $75 per acre. Of the nine largest crops based on area, this is the second largest outstanding loss on a per harvested acre basis.

[1] https://soygrowers.com/news-releases/soybean-crush-expansion-2025-update/

[2] https://soygrowers.com/news-releases/proposed-biofuel-blending-obligation-presents-an-opportunity-for-u-s-soy/

[3] https://soygrowers.com/news-releases/new-study-shows-epa-half-rin-proposal-would-keep-u-s-soybean-demand-strong/

[4] https://soygrowers.com/news-releases/new-survey-highlights-farmer-adoption-of-seed-treatment-applications/

[5] https://www.fsa.usda.gov/resources/programs/farmer-bridge-assistance-fba-program

Several factors have left soy uniquely vulnerable in the safety net. First, soybeans remain underrepresented in base acres upon which the Title I benefits are based. Soy only has 52.8 million base acres compared to 80.4 million harvested acres for the 2025 crop. The soybean reference price upon which PLC benefits are based is generally less beneficial for soy as well. This combination results in little additional assistance coming to soy in the farm bill after the current ad hoc ends.

Second, the prices used to calculate FBA rates were not reflective of the current situation. FBA used the December 2025 WASDE estimates of the season average farm price when calculating revenues. For soybeans, this was $10.50 per bushel. Given cash prices this marketing year, it will be difficult to achieve such a price. In fact, the January WASDE lowered the soybean season average price to $10.20 per bushel. If FBA benefits were calculated one month later, the payment rate for soy would have been higher to better reflect the actual low prices being received by farmers.

It is important that total assistance being given to farmers doesn't exceed their losses. Record high input prices will not recede in the face of excess payments. Just as importantly, it is critical to balance payments across crops. The FBA is the second year in a row that ad hoc is tied to actual plantings. Persistently low payment rates for soybeans create disincentives to plant soybeans if farmers believe they will not receive adequate support if the downturn continues.

Even if these factors are considered, they still don't account for the lost trade with China. Economic losses only consider financial statements, not opportunity costs. If soybean farmers had a profitable year with normal trade, economic loss assistance will never compensate producers for the lost profits due to geopolitics.

Summary

Soybean farmers find themselves in the midst of a larger geopolitical situation that eroded their margins. While the announced purchase commitments from China helped restart trade flows, they will still represent a loss to growers. Finalizing the proposed RVO and 45Z guidance will dampen the loss by growing an alternative, domestic market. Time is of the essence as the year has started without final blending levels. Even with strong RVOs, soybean farmers face large losses this year that are uncovered by the FBA program and upcoming farm bill payments. Further assistance should consider this unaccounted loss. While not by farmer choice, the outcome for soybean producers largely lies in the hands of policymakers as we head into 2026.