Soybeans market weighs Middle East risks as US–Iran talks could reset China demand

Escalating tensions in the Middle East have injected fresh uncertainty into the global soybean market, with participants questioning whether China will step up purchases of US origin amid fears of disruption at the Strait of Hormuz — even as potential US–Iran negotiations emerge as a possible circuit breaker.

Market sentiment turned sharply lower after reports of heightened risks to shipping through the Strait, a critical artery for global energy flows. CBOT soybean futures fell on April 13, with the May (K) contract down 13.5 cents to 1,162.25 cents/bushel and July (N) futures losing 13.75 cents to 1,177.50 cents/bu.

"I just think soybean futures have only really been propped up by hope that China will still buy more US soybeans," a trader in the CIF New Orleans market said. "But the US blocking the Strait of Hormuz doesn't sit well with China, so I think that hope is fading."

Concerns center on the potential knock-on effects of the US-Iran conflict on US-China relations and trade flows. Some market participants said that if the conflict draws China more directly into geopolitical frictions — particularly around energy security — it could further reduce Beijing's appetite for US agricultural commodities.

"The likelihood of Chinese demand is tied to how this Iran situation evolves," a FOB Gulf trader said. "Blockade of oil vessels heading to China could trigger retaliation from them."

Reflecting the softening sentiment, Platts, part of S&P Global Energy, assessed the FOB Gulf soybean basis for May shipment at 85 cents/bu over the May (K) futures contract on April 13, down 8 cents day over day, pushing outright prices lower.

Participants in the Brazilian soybeans market also believe that China will continue to obtain its soybeans from South America.

"Given current market conditions, China is expected to continue sourcing soybeans from Brazil regardless of US political moves, as Brazil remains the most cost competitive origin."

The Brazilian export program remains heavy in Q2–Q3, and China typically relies on Brazil to cover the bulk of its needs during this window.

By the end of the week, Iran announced that the Strait had been reopened. However, the White House said on a social media post that even though "the Strait of Hormuz is completely open and ready for business and full passage" the US "naval blockade will remain in full force and effect as it pertains to Iran only, until such time as our transaction with Iran is 100% complete."

"It is said to be 100% open," a trader in the FOB Gulf market said. "But it is very heavily controlled by Iran so it will take a little bit of time for the backlog to catch up."

Sources in China believe that an improvement in US-China relations or competitiveness could shift some demand back to US origin, especially during the Q4 peak export window.

"It is possible China could buy US soybeans again out of goodwill, potentially around 1 to 2 million mt of the 8 million mt," a Singapore-based soybean trader said.

"I think the Iran-US issue itself won't affect China-US negotiations," a Chinese source said. "But if because of this issue — for example, the US says China exported weapons to Iran or something like that — and then imposes tariffs on China, then I think it would."

If the conflict in the Middle East causes broader political tensions between the US and China, as a result of the war, that could negatively impact the outcome of the trade negotiations, the trade source added.

Platts assessed the SOYBEX FOB Santos soybean contract for June loading at $444.80/metric ton on April 16, SOYBEX FOB New Orleans for June shipment at $464.99/metric ton, and CFR China for June shipment at $490.34/mt