Dust continues to hang over the agreement President Donald Trump made with China President Xi Jinping, clouding the details of how a reduction in retaliatory tariffs will play out for U.S. farmers who are anxious to move soybeans into the export market.
Despite some initial positive steps, a 13% tariff on U.S. soybeans remains, making them less competitive than Brazilian alternatives, according to a Reuters article published Thursday.
Kevin Paap, a farmer in Blue Earth County, Minn., remains cautiously optimistic. While he welcomes the trade agreement, he emphasizes the critical need for implementation.
“Trade agreements aren’t over once they’re signed. They’re really just getting started, and we need to make sure they’re enforced, they’re used, and hopefully they’re improved,” Paap says.
Western Iowa farmer Kelly Garrett shares a similar sentiment, albeit with a slightly more positive outlook.
“It’s nice to see we’re moving in the right direction, but I would sure like to see some deliveries made because China’s canceled so many orders in the past. Once the boats start heading in that direction, I’ll feel more confident and positive about the whole thing,” says Garrett, who produces grain and beef cattle near Arion.
The White House announced last week that China will purchase at least 12 million metric tons (mmt) of U.S. soybeans in the last two months of 2025 and at least 25 mmt in each of the subsequent three years. However, Beijing has yet to officially confirm these figures.
How China will meet its soybean commitments remains unknown. Past patterns show Chinese purchases closely track U.S.–Brazil price spreads, with strong buying when U.S. prices are competitive and sales falling when premiums widen.
“It is unclear whether China will prioritize the 25 MMT target despite unfavorable pricing, overlook the retaliatory ... tariff, or keep purchases contingent on competitive cost fundamentals,” reports Sandro Steinbach, associate professor and director of the Center for Agricultural Policy and Trade Studies at North Dakota State University, in the monthly NDSU Ag Trade Monitor.
Farmer Sentiment Sees Slight Improvement
Despite the ongoing tariff challenges, there has been a modest uptick in U.S. farmer sentiment over the past month.
The Purdue University-CME Group Ag Economy Barometer index rose to 129 in October, a 3-point increase from September. The improvement is largely attributed to positives in the livestock sector, according to James Mintert, Purdue Center for Commercial Agriculture, and one of the administrators of the barometer.
“That’s clearly part of it,” Mintert told AgriTalk Host Chip Flory on Wednesday. “The second thing is, I think it was a recognition that yields were really good this year. I know there’s been some exceptions to that, and there’s some variability out there, but overall yields have been pretty positive.”
Both Paap and Garrett report harvesting above average or better corn and soybean yields for the 2025 season.
Paap says yields were “above APH for both corn and soybeans, and more importantly, we were over 30% above last year’s corn yields.”
Garrett, while slightly below his initial corn yield expectations due to disease pressure, still achieved 225 bushels per acre. That is “10 bushels better than last year, and we’re going to be 5 bushels over APH,” he told Flory.
Basis Shows Signs Of Strengthening
Soybean basis improved 40¢ to 50¢ from September lows following the U.S.-China deal on anticipated demand, though recent softening and YoY weakness persist, reports Steinbach.
Paap, while acknowledging the improvement in basis, notes it’s moving up from one of the lowest he has ever seen. “Yes, it’s an improvement, but it’s not back to what you would expect a harvest basis to be,” he says.
Therein is a key rub for both Paap and Garrett. They see some improvement in basis and marketing opportunities, but they still aren’t at the level either farmer wants or needs.
Steinbach notes that new trade arrangements with Thailand, Malaysia, Cambodia, and Vietnam broaden export access and could support U.S. feed grains, meats, oilseeds and other products.
Despite the continued uncertainty in the marketplace, Mintert reports that over 70% of U.S. producers responding to the latest Purdue Ag Barometer say the U.S. is headed in the “right direction.”
Paap says he can agree with that perspective if “legislators will set politics aside and concentrate on policy and getting things done.” He especially wants to see a new farm bill and year-round nationwide availability of fuels with a 15% ethanol blend (E15).
“But if we’re going to take this opportunity and continue to make it a challenge and be all political and not work together, that’s not the right direction in my mind,” Paap notes.
Garrett says he is hopeful the farming economy is finally moving in a positive direction.
“We hit rock bottom with the basis on soybeans and with the corn market being down there around $4,” he says. “Now, with some of the news we have, I think we are headed up.”
Garrett and Paap detail more of their hopes for trade in the discussion they had Wednesday with Chip Flory on AgriTalk:
