Southern Finance 21st Century Economic Report Special Agreement Writing King Deviant, Yellow
On Friday, September 26, the Chicago Commodity Exchange Group (CME) soybeans’ December futures price reached 1013.75 cents/pound (about 27.216 kilograms). As of Friday, soybeans’ prices rose slightly this year by 0.32%, but soybeans’ prices fell dramatically by 28.63% over the past three years; corn’s futures price in December was 422 cents/pound, a cumulative drop of 7.96% since this year and a drop of 36.97% over the past three years.
As shown in the chart, since the record high in 2022, the CME soybeans and corn futures mainstream contract price index (which made the soybeans price 1055.00 in February 2018 and the corn price 374.5 equal to 100) has continued to show a slow downward trend, and the current price index has fallen back to the level of several years ago.
The United States, as an agricultural power, has strong competitiveness in the global agricultural market. Soybean and corn also occupy an important position in U.S. export trade. In 2024, soybean exports ranked 15th in total U.S. exports of commodities, while corn exports ranked 22nd. In 2017, before the Trump administration launched the trade friction, U.S. soybean exports were $215.3 billion, ranked 12th; corn exports were $95.8 billion, ranked 25th. In addition, the U.S. Central West is mostly an agricultural state, the Republican party's basic disc in the elections, farm business conditions and farmers' satisfaction may even affect the election, and agriculture's influence on U.S. politics can be seen.
Soybean and corn prices are low
Even in a developed country like the United States, farmers still "rely on the weather to eat", and the agricultural harvest determines the operating income of the farm that year. At the same time, the agricultural subsidies of the U.S. government directly affect the final income of farmers. As inflation in the United States has lasted for more than four years, the cost of agricultural production has reached an all-time high, while the prices of soybeans and corn have been sluggish for several consecutive years, making farmers miserable.
In addition to soybeans and corn, the prices of other agricultural products are equally weak.The Chicago Commodity Exchange data show that the futures trading prices for oats, wheat and rice have dropped 19.27%, 42.01% and 38.30% respectively over the past three years.
A warning letter sent by the American Soybean Association to Trump last month pointed out that American soybean farmers are on the edge of a cliff in trade and economy. As the harvest season approaches, foreign orders (especially from large customers abroad such as China) have dropped significantly; Soybean farmers can't bear the economic pressure brought by long-term trade disputes.
A survey of 1,034 farmers surveyed by the Agricultural Journal from August 28 to September 10 showed that half (46 percent) of respondents believed that the United States was on the brink of a farm crisis; 80 percent believed that the farm economy may be on or near the brink of collapse; and 65 percent of farmers said that they were worried about the state of the farm operations compared to a year ago.
Krista Swanson, chief economist of the American Corn Growers Association, believes that the agricultural economy is experiencing a difficult situation rarely seen in 25 years. This crisis may have far-reaching implications, involving all aspects of the agricultural economy, as farmers have to cut spending, negatively impacting local communities. According to the report, 58% of respondents said they delayed equipment purchases; 38% of farmers reduced their fertilizer use; Twenty-two percent of respondents said they were looking for a non-farm source of income.
Agriculture is linked to midterm elections
From the 20 major soybean producing states in the United States, the main soybean producing regions are politically more inclined to Republicans, accounting for 17 states, while the Democratic Party only 3 states. In the Republican states, Iowa, Indiana, Minnesota, Nebraska, Missouri, Ohio, North Dakota and South Dakota have the highest annual soybean production.
In recent elections, the backing of the State of Rolling Stones was often the key to whether political parties could enter the main White House. At the 2024 general election, the State of Rolling Stones recognized by the United States were Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin, where Michigan, North Carolina, Pennsylvania and Wisconsin were the major soybean producing states.
Similarly, the 20 major corn-producing states in the United States are mostly Republican, with the Republicans representing 16 states and the Democrats representing only 4 states. Among the pro-Republican states, Iowa, Nebraska, Minnesota, Indiana, South Dakota, Kansas, Missouri, Ohio, North Dakota and Wisconsin have the highest annual corn production, with Michigan, Pennsylvania, and Wisconsin being the major rolling states.
To consolidate the Republican party’s basic plan, the Trump administration’s “One Big Beautiful Bill Act” plans to allocate about $66 billion to the agricultural sector, but about $59 billion is spent on the construction of farm production safety networks, and farmers can actually get remedies such as cup watercoach salaries, which are difficult to ease the current crisis.
Although the Trump administration plans to use tariff revenue to provide economic assistance to farmers, if the big buyers of American agricultural products fail to turn back, and the government's economic assistance is extremely limited, the agricultural production sector will be mired in a quagmire. Next year's mid-term elections are approaching, and the Republican Party may face severe challenges. Once it loses its fundamentals, the Republican Party may suffer a painful election defeat, thus losing control of both houses of Congress.
Tariffs are a problem.
The OECD recently released a study report stating that higher tariffs are becoming increasingly pronounced to suppress economic activity, with the world and U.S. economies expected to lose momentum in 2026. The organization predicts that U.S. economic growth rate will drop from 1.8 percent in 2025 to 1.5 percent next year, and global economic growth rate will drop from 3.3 percent to 3.2 percent. The OECD also predicts that by the end of August, U.S. real tax rates will rise from 15.4 percent in mid-May to 19.5 percent, the highest level since 1933; the average inflation rate is expected to rise from 2.7 percent this year to 3 percent next year. If the government fails to effectively curb fiscal deficits, once the next economic shock arrives, it will be difficult for the government to respond effectively.
The U.S. tariff policy and other counter-attacks are a major cause for its agriculture to face difficulties, but this is only a shadow of the shock of the overall economy, and other industries will continue to feel increasing cost pressure. According to 2022 statistics, there are about 3.4 million U.S. agricultural practitioners. In recent years, this number may have declined, and the size of the agricultural production sector is small, but the impact is considerable, especially for the Republican basic disc.
The principle of the market is to reduce trade barriers, allowing farmers to regulate production according to market price signals to supply and demand balance; while government intervention is to maintain the basic functioning of agriculture by providing subsidies. From the point of view of the economic income of U.S. farmers, the economic benefits of market supply and demand relations are far greater than government agricultural subsidies.