How War and Climate Affect Soybean Prices

Soybeans are one of the most important crops in the world — essential for animal feed, biofuel production, and food products. As a global commodity, their price is heavily influenced by geopolitical events and climate conditions.

In recent years, wars, trade conflicts, and extreme weather have caused dramatic shifts in soybean markets — creating both risks and opportunities for farmers, traders, and investors.

In this article, we’ll explore how war and climate events affect soybean prices, and what producers can do to prepare for market volatility.

Why Are Soybeans So Sensitive to Global Events?

Soybeans are:

• Heavily traded internationally

• Produced and exported by a few major countries (e.g., Brazil, USA, Argentina)

• Dependent on specific climate windows for planting and harvesting

• Used in feed, oil, industrial and biofuel markets — all of which have their own supply/demand dynamics

Because of this, any disruption in production, transportation, or trade relationships can significantly affect prices.

How War Affects Soybean Prices

1. Trade Disruptions and Export Restrictions

Wars or geopolitical tensions can lead to:

• Export bans or restrictions

• Port closures

• Sanctions and trade barriers

• Higher insurance and freight costs

Example: The war in Ukraine affected not only grain and sunflower oil exports but also global freight routes, pushing up transportation costs for all commodities — including soybeans.

🌍 When one major exporter is offline, demand shifts to others — which can raise prices in Brazil or the U.S.

2. Currency Fluctuations

War often causes economic instability, leading to:

• Volatile exchange rates

• Inflation in producing or importing countries

• Devaluation of local currencies

For example, a weaker Brazilian real makes Brazilian soybeans cheaper for foreign buyers, boosting exports — and often raising domestic prices.

3. Fuel and Fertilizer Prices

Many wars, especially in oil-producing regions, lead to:

• Increases in fuel prices (affecting farm operations and transport)

• Fertilizer shortages (especially nitrogen, potash, and phosphate)

• Higher input costs for soybean production

⛽️ When fertilizer and diesel prices rise, farmers may reduce planted area — tightening supply and raising prices.

4. Food Security Concerns

In wartime, governments may:

• Prioritize domestic food and feed needs

• Increase soybean stockpiling

• Subsidize local production or restrict imports

This alters global trade flows and creates uncertainty, which is often reflected in price volatility on the futures market.

How Climate Affects Soybean Prices

1. Droughts and Rain Deficits

Soybeans are highly sensitive to water during:

• Germination and emergence

• Flowering and pod development

• Final grain filling

Droughts can reduce yields dramatically. In 2022, for example, a severe drought in Argentina and southern Brazil cut regional soybean output, pushing global prices higher.

2. Excess Rain and Floods

Too much rain causes:

• Delayed planting or harvest

• Soil compaction

• Increased disease pressure (e.g., rust, root rot)

• Poor grain quality

Floods in key production areas like the U.S. Midwest or Brazil’s Mato Grosso can remove millions of tons from the global supply.

3. Heatwaves and Temperature Stress

High temperatures during flowering or grain fill can:

• Reduce pollination success

• Speed up crop maturity (reducing grain size)

• Increase evapotranspiration and water stress

Climate models show more frequent extreme heat events, making production less predictable — and markets more volatile.

4. Long-Term Climate Trends

Climate change brings:

• Shifts in planting zones and calendars

• More erratic rainfall

• Increased risk of pests and diseases

• Challenges to yield stability

While some regions may benefit short term (e.g., expanded production in southern Brazil), the overall increase in risk drives up global price uncertainty.

Real-World Impact: 2022–2024 Examples

Soybean prices are increasingly affected by non-agronomic factors — making risk management more important than ever.

How Farmers Can Prepare

✅ Monitor Global Events

Use reliable sources to stay informed:

• USDA, FAO, and Conab reports

• Futures market analysis (e.g., CME, B3)

• Weather alerts and climate models

• Geopolitical news related to major exporters/importers

✅ Diversify Sales Strategies

• Don’t rely solely on spot prices

• Use futures contracts, forward sales, or options to lock in prices

• Work with cooperatives or traders who offer price protection programs

✅ Improve Resilience in Production

• Invest in drought-tolerant varieties

• Use smart irrigation and soil moisture monitoring

• Maintain good crop rotation and soil health practices

✅ Manage Input Costs

• Monitor fertilizer markets

• Explore organic or low-input alternatives

• Join purchasing cooperatives for better prices

Final Thoughts: Prices in a World of Uncertainty

The soybean market is no longer shaped just by yields and planting areas — it’s shaped by global politics, climate change, and economic disruption.

By understanding how war and climate events affect soybean prices, farmers and agribusiness professionals can make better decisions, reduce risk, and seize opportunities in a more volatile world.

Stay informed, stay flexible, and remember: in global agriculture, information is power — and preparation is profit.