New tariffs on imports into the US will increase the cost of imports and disrupt import patterns, which will be bullish for domestic organic corn and soy markets, market contacts said.
US president Donald Trump announced new tariffs on Wednesday, which include a 10pc tariff on all imports into the US and additional reciprocal tariffs on countries that have a large trade deficit with the US.
Most imports from Canada, including organic corn and soy, are exempt from these taxes under the United States–Mexico–Canada Agreement (USMCA). However, this could change if the Trump administration determines that the countries are not satisfying agreements regarding preventing migration and fentanyl smuggling. Canada's exemption will make it competitive for selling both organic corn and soy products into the US.
Organic corn
Organic corn markets will be more insulated from tariff impacts than organic soy markets, since the majority of supply is produced domestically.
Over 75pc of the organic corn consumed in the US during the 2023-24 marketing year was produced in the US, according to Argus estimates. Nearly all the remaining volume came from Turkey, Canada, Romania, and Argentina.
Of these four countries, only Romania will pay above the 10pc minimum fee. Imports from Romania will be assessed a 20pc tariff, since Romania is part of the European Union. Romania shipped over 25,000 metric tonnes (t) of organic whole corn to the US during the last two marketing years, but this volume could be redirected to Turkey to be milled into cracked corn. The resulting cracked corn would then be subject only to the 10pc tariff on Turkey.
As of November 2024, Argus forecast that the US will import 228,000t of organic corn during the 2024-25 marketing year. The US imported 127,000t between September and March of the 2024-25 marketing year, according to Argus estimates. That leaves over 100,000t remaining that is at risk from these tariffs.
Canada will continue to export organic corn to the US as long as they remain exempt but supplies from Turkey are at greater risk. Turkish cracked corn struggled to compete with cheaper domestic corn during recent months. A 10pc tariff will further increase how high corn prices will have to rise to make imported Turkish cracked corn competitive, which could push down imports. US prices are expected to rise as farmers increase offers due to competing imports being more expensive.
Argentinean exporters will struggle to sell into the US with new tariffs, market contacts said. Current US prices are below a profitable level for Argentinean farmers, which already reduced acreage. With a 10pc tariff, the price may be low enough that farmers will prefer to sell into domestic conventional markets. Prices will have to rise more significantly in order for imports from Argentina to continue.
Organic soy products
The US organic soy market is dependent on imports, which leaves it more exposed to price increases due to the new tariffs.
Imports of organic soy products accounted for over two-thirds of US supplies, with the remainder coming from domestic production. Some regions, such as the west coast and southeast, are especially dependent on imports, market contacts said. These regions will be more exposed to price increases as the tariffs take effect.
Most suppliers of US organic soy products will pay a 10pc tariff, but some smaller suppliers, such as China and India, will be priced out of the US market due to reciprocal tariff rates of 34pc and 27pc respectively. The 34pc tariff on China is in addition to a 20pc tariff that was previously announced.
African countries supply about half of US organic soybean meal imports, according to Argus estimates. Of the African countries that export organic soy products to the US, only Nigeria will pay a rate above the minimum at 14pc.
The US imported 242,000t of organic soybean meal between September and February of the 2024-25 marketing year, compared to a forecasted marketing year total of 374,000t, according to Argus forecasts. The US also imported 168,000t of organic whole soybeans over the same period, compared to a total marketing year forecast of 231,000t. That leaves 132,000t of organic soybean meal and 63,000t of organic soybeans that will need to be filled with domestic supplies or more expensive imports.
About 23,000t of outstanding soybean volume will be covered by a vessel that left Argentina this week, but remaining volumes could be affected.
Further supplies of organic soybean meal into the US could also be disrupted by exporters defaulting on existing contracts, market contacts said. This could create shortages of organic soybean meal on the coasts. This could especially affect the west coast, which relies primarily on imports to meet their organic soybean needs. These buyers would have to buy some of their meal from domestic crushers, which would push up domestic organic soybean and soybean meal demand.
Domestic supplies of organic soybeans from the last US harvest are also tight, market contacts said. The tariffs will increase the cost of importing whole soybeans for crush, which will further push up domestic soybean meal prices. Overall, the increased price of imports will have a significant bullish impact on an already tight organic soy market.
