The South Side of Chicago may seem an unlikely place to talk soybeans, but that’s where I was last week. The audience wasn’t farmers or traders, but folks interested in learning more about the crop’s Midwest connection to global trade. Also on the bill was Illinois grower Jeff O’Connor, who was just back from a trade mission to Southeast Asia, and Andrew Ofstehage, a professor studying U.S. farmers who relocated to Brazil.
We talked about the “noble bean” for more than two hours, touching subjects far and wide — except for the elephant in the room: The war with Iran and its huge impact on energy and fertilizer markets.
Perhaps it was fatigue with the issue, or the fast-moving barrage of headlines about the conflict. But even if you can’t change the facts on the ground, it’s crucial to consider potential impacts on supply and demand, not to mention your bottom line. Those impacts could be significant.
Here are a few topics to follow and why.
Who grows it?
European natural gas futures doubled after bombs started falling in Iran then backed off 20% as when the temporary truce dropped. But the volatility was a drop in the bucket compared to the surge after Russia invaded Ukraine, when costs rose 10-fold. Current levels are 85% off those highs, helping relative calm prevail not only in fuel but also in fertilizer. Sure, urea futures at the U.S. Gulf are just 1% off last week’s rally to four-year highs from the post-pandemic inflation spike, and the swaps market shows fall contracts around 15% lower than the nearby.
Still, cash ammonia in the Midwest topping $1,000 a ton raises big questions about economics of last-minute shifts on 2026 swing acres between corn and soybeans.
World Agricultural Supply And Demand estimates out April 9 as usual made few changes to either crop’s 2025-26 balance sheet but tinkered enough around the edges to raise average cash price forecasts by a nickel, to $4.15 for corn and $10.30 for soybeans.
If those prices hold through the 2026-27 marketing year, both crops face triple digit losses per acre, with corn in the red $148 and soybeans not far behind at -$140. That difference alone might not convince farmers to park corn planters. However, a lower cost per acre for soybean production might tip the scales, especially with financing expenses expected to stay high.
On the money front, the Federal Reserve may not begin lowering rates until summer or fall. Its hands are tied by leadership turnover at the central bank and the fog of war.
On the crude oil side, uncertainty over Iran sent prices sharply higher when trading resumed Sunday, sending benchmarks back to triple digits. Deferred West Texas Intermediate contracts didn’t have anything to hold onto to return to levels seen for three years or more before the bombing started, suggesting the market could stay elevated for a while before normalizing. Remember when prices were depressed on notions the world was suffering from a supply glut?
Who buys it?
Growing a crop is only one part of the challenge. Marketing production has its own risks. For soybeans, that means China. The Asian powerhouse takes upward of 90% of Iran’s crude oil exports, so Beijing has big incentives to get tankers flowing through the Strait of Hormuz.
That could provide enough grease to get a deal done, at least in theory, in time for President Trump’s upcoming visit next month. If all sides agree to play nice, China could agree to ramp up soybean shipments out of the U.S. in exchange for an extended cease-fire in the Middle East.
This might be a win-win-win. But only if Isreal backs off its desire to get rid of the Iranian threat once and for all.
Negotiations take time. Remember, the Paris Peace Talks ending the Vietnam war dragged on for five years before President Nixon declared “peace with honor.” And proclaiming “Mission Accomplished” can backfire — just ask President Bush about that.
China can hedge its soybean bets, too. In addition to another huge harvest in South America, livestock feeders are turning to alternative feeds fermented from other ingredients as their needs flatten out due to an aging population.
What’s it worth?
Big speculators trimmed bullish bets on beans last week as hopes for peace emerged, following a surge of buying after the war began. The play on beans was tied to strength in soyoil, which normally takes a back seat to meal in determining the value of products made by crushers. But the percentage of soybeans’ worth derived by oil hit a record, a warning sign that I historically watch.
My models put the target range for selling new crop soybean futures at $11.80 to $12.70, around 20 cents higher than last week’s close. Corn, by contrast, remains in my target range of $4.70 to $5.10, despite a sell-off on fears farmers might plant more than the 95.3 million acres estimated in USDA’s March 31 Prospective Plantings.
The government forecasts a $4.6 billion increase in net farm income for 2026, 25% off the high from 2022, assuming a whopping $44.3 billion in direct payments. So as long as Washington writes the checks and China buys the beans, the sky isn’t falling. Yet.