Global agricultural trade and producer profitability to face major challenges in 2025, warns Rabobank

GLOBAL – Global agricultural markets are expected to navigate a turbulent landscape, marked by new tariff disputes, geopolitical tensions, climate change-related challenges, and a host of other economic factors, according to Rabobank’s Agri Commodity Markets Outlook 2025 report, released on December 17.

The report highlights a range of key issues that could have far-reaching effects on agricultural trade and the profitability of producers worldwide in 2025.

One of the central concerns in the coming year is the potential for a new wave of tariff disputes, especially with the anticipated return of Donald Trump to the U.S. presidency.

These disputes are expected to target agricultural imports from countries such as China, Mexico, Canada, and others, exacerbating already strained global trade dynamics.

According to Carlos Mera, head of Agri Commodity Markets Research at Rabobank, these tariffs could significantly compress margins for U.S. farmers, particularly those involved in major grain and oilseed production.

The report also notes a troubling trend, with agricultural imports to the U.S. rising by 280% over the last two decades, totaling $195 billion in 2023.

“Tariff disputes, particularly those aimed at China, could further stress U.S. soybean exports, which have already seen a 25% price drop in the past year,” Mera said.

While the U.S. government may consider compensatory measures, uncertainty remains, and farmers are likely to face additional financial strain.

On a broader scale, the report underscores the potential for global trade fragmentation, which could lead to higher inflation, currency fluctuations, and disruptions in the availability of U.S. dollars in developing nations.

These factors, coupled with an ongoing reduction in agricultural production and trade in conflict zones like Ukraine, could contribute to the volatility of agricultural markets.

The war between Russia and Ukraine, which has been ongoing since February 2022, continues to take a toll on Ukraine’s ability to produce and export grain.

Although Ukraine has managed to maintain a shipping corridor for its agricultural exports through the Black Sea, it faces mounting challenges, including labor shortages, adverse weather conditions, and low stock levels.

Even without further aggression from Russia, Ukraine’s agricultural exports are expected to decline in the coming years, which could have ripple effects on global grain markets, particularly wheat.

Climate change is another major factor influencing agricultural productivity. While warmer temperatures are extending growing seasons in northern regions and boosting yields, the effects of climate change are detrimental in low-latitude regions, threatening crop production.

Rabobank’s report suggests that corn yields may suffer, while wheat could see some benefit from higher CO2 levels and expanded planting areas in high-latitude regions.

Additionally, a short and weak La Niña weather pattern is expected to impact crop production in key regions. While the mild intensity of the event suggests limited long-term effects, the delayed rainfall in Brazil and drought conditions in Argentina and the southern U.S. could affect the planting and maturation of key crops like soybeans and corn.

Despite these weather challenges, Rabobank notes improvements in weather conditions for wheat-producing countries like the U.S., Ukraine, Argentina, and Russia, providing a more optimistic outlook for the 2025 wheat season.

Despite these challenges, global inventories for corn and soybeans remain relatively strong heading into 2025.

However, Rabobank warns that wheat inventories are becoming increasingly tight, with stock-to-use ratios of major exporters expected to drop to 24.5% in 2024-25, the lowest since 2013-14. This decline could drive wheat prices up, potentially reaching as high as $7.5 per bushel.

On the soybean front, the global market is heading toward a record surplus for the third consecutive year, thanks to a strong crop in the U.S. and a promising outlook for South America’s harvest.

However, with demand from China, the world’s largest importer of soybeans, eveling off, Rabobank predicts that prices may continue to face downward pressure, even without the looming threat of trade wars.

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