As we look ahead to the 2025 growing season, commodity markets face a challenging landscape. Experts predict that the impacts of tariffs, coupled with geopolitical tensions, will significantly affect pricing and margins for key agricultural products. With farmers already experiencing tight margins, understanding these market shifts is critical for planning ahead.

Agri commodity markets outlook 2025: Fat tariffs lead to slim margins

By Carlos Mera & Oran van Dort, Rabobank

Agri commodity markets outlook 2025: Fat tariffs lead to slim margins

2024 has been a year of further price declines for major grains and oilseeds and for sugar, while tropical tree crops like cocoa, coffee, and palm oil have experienced clear upside. Farmers of major grains and oilseeds will enter 2025 with much more compressed margins –negative in some cases – and a very uncertain geopolitical outlook.

At the time of writing, we are expecting a tariff war to start following the change of government in the US. One that will involve many geographies, technologies, and industries, and will both create and destroy a lot of value in several countries. Potential tariffs on imports from China, Mexico, Canada, and many other countries could result in farmers facing an attack on their margins. The US imported USD 195bn worth of agricultural products in 2023, including alcoholic beverages, fruits and vegetables, sugar, cheeses, vegetable oils (including used cooking oil), coffee, and cocoa.

Most likely, the US will make China the primary target for tariffs, with used cooking oil imports potentially among the first to be affected. When China retaliates, the humble soybean, as the single largest agricultural purchase that China makes from the US, might once again find itself in the crosshairs. With soy prices down by 25% over the last year, US farmers might not believe their (bad) luck. The US government could provide some compensatory measures to US farmers, but until such measures are announced, there is plenty to worry about. Significant shifts in international trade are expected. For example, a trade deal between the US and the EU could result in all or most of EU soy and soymeal import demand shifting to the US and away from South America.

Ukrainian agricultural exports expected to decline

Meanwhile, in the midst of an actual war, Ukraine has managed continue to export agri commodities at a decent clip via its Black Sea corridor for over a year. Barring an increase in Russian bombardment on Ukrainian ports and vessels braving the export corridor, we expect Ukraine to continue to ship its exportable surplus. However, the country still faces major challenges, such as labor shortages, adverse weather, and low stocks at the start of the current export season, among others. As a result, even without additional Russian aggression, Ukrainian agricultural exports are expected to decline moving forward. When it comes to wheat, there is also a major risk of Ukraine hitting Russian ports, which are responsible for roughly 23% of global wheat exports.

A mild La Niña event expected

On the weather front, we are likely heading toward a La Niña event, but one that looks very short and weak. Even though the event has not been officialized, some of the effects may have already materialized: The significant delay in the return of rainfall in Brazil and the dryness in Argentina and southern parts of the US seen in recent months are typical La Niña weather effects. In principle, we do not expect huge impacts, given the mild intensity of this potential event. However, the delay in the soybean harvest will result in a delay in safrinha corn planting in Brazil, and the maturation of that corn may coincide with the start of the next dry season. We will not learn anything new about this risk until late March or April.

For a deeper dive into the 2025 commodity markets outlook, check out the full article. https://www.rabobank.com/knowledge/q011460376-agri-commodity-markets-outlook-2025-fat-tariffs-lead-to-slim-margins.