DENVER (DTN) -- With farmers already looking at red ink before the launch of a tariff war, economists at Commodity Classic encouraged producers to look closely at their crop insurance options, such as adding Enhanced Coverage Option (ECO) to their coverage.

Corn and soybean producers are heading into planting season facing losses. There's a lot of concern about losing export demand right now.

American Soybean Association (ASA) President Caleb Ragland, a farmer from Magnolia, Kentucky, said, "Farmers are frustrated" as he noted comments from President Donald Trump's Truth Social that farmers should plan to sell their crops inside the United States, and "have fun" as he puts tariffs on imports.

"Tariffs are not something to take lightly and 'have fun' with," Ragland said. "Not only do they hit our family businesses squarely in the wallet, but they rock a core tenet on which our trading relationships are built, and that is reliability. Being able to reliably supply a quality product to them consistently."

Economists for ASA and the National Corn Growers Association (NCGA) on Tuesday stressed the need for demand and importance of using crop insurance to manage risk.

"Losing any (demand) is not going to be positive for prices," said Krista Swanson, chief economist for the National Corn Growers Association. "Especially with everything going on right now, we already have profitability projections in the negative, we don't want to lose any corn demand." Swanson said.

Swanson was joined Tuesday by USDA Chief Economist Seth Meyer, who told farmers he had initially planned to share some of the statistics he had given last Thursday during the USDA Agricultural Outlook Forum. Now, Meyer said, he and other USDA economists will have to factor in the impact of tariffs on the World Agricultural Supply and Demand Estimates (WASDE) for March 11.

"So, Thursday, we didn't have tariffs. Now we have tariffs," Meyer said. "My crew will then now need to think about how to implement those tariffs into world agricultural supply and demand estimates for Tuesday, in addition, when the Mexicans have not told us what their retaliation might look like."

China has imposed a 15% tariff on U.S. corn and a 10% tariff on soybeans, as well as pulling export licenses for companies. Read more about that here: https://www.dtnpf.com/….

Canada so far is not imposing tariffs on U.S. corn or ethanol, and Mexico is expected to announce its response on Sunday.

"Now I think the market is saying, how does that 15% from China affect corn? What is Mexico going to retaliate? Can the Mexicans afford to retaliate?" Meyer said.

With high protein demand in Mexico, Meyer said, "it will be interesting to see what they decide to retaliate."

CORN OUTLOOK

Mexico is the No. 1 destination for U.S. corn, so corn producers will be watching closely for that decision.

"Last year, over 40% of our corn went to Mexico. We're on a similar pace track this year," Swanson said. "Number five destination for corn is Canada and China is number eight. But these destinations aren't just important for our corn, but also the livestock and value-added products and ethanol and DDGs."

Corn producers nationally are projected to lose $111 an acre even though corn is expected to increase 3.4 million planted acres at the expense of soybeans. On a per-bushel basis, corn farmers are projected to lose 61 cents an acre, the lowest level since 86 cents a bushel in 2005.

"So, as you could imagine, if, if we see some of these tariffs and potential retaliation start to impact price to the downside ... 2025 could drop even more," Swanson said. "And what's already concerning to me, when I look at it, is that it's already the lowest level since 2005, and that's notably before the ethanol expansion era."

Swanson said the price signal calling for more corn acres this year is confusing because it doesn't necessarily balance with profitability. "If you look at corn versus soybeans or cotton or spring-planted wheat, price has been signaling corn acres. But again, you know, what are farmers thinking about? They want to know, what is that profitability expectation?" she said. Swanson added, "Corn isn't necessarily more profitable even though the price signals are there."

The potential for profitability varies greatly depending on region, shipping options, soils, etc. "And so, you know, individual farmers might have a profitability picture that looks a lot different from this."

Swanson said with the trade dispute could come future export opportunities. Time will tell.

"Although the current administration does make use of tariffs, also, as we saw in the first Trump administration, trade deals with market access are important to them too. And so, I think that is a potential opportunity," she said.

Stressing the need for domestic demand, NCGA leaders have pressed for Congress to pass a bill opening up year-round E15 nationwide. The group had thousands of "I Support E15" buttons at Commodity Classic this year. Every percentage in growth of ethanol sales equates to about 400 million bushels (mb) of corn. A full shift to 15% ethanol would translate into roughly 2 billion bushels (bb) in domestic demand.

SOYBEAN OUTLOOK

Scott Gerlt, chief economist for the American Soybean Association (ASA), said a U.S. tariff dispute helps soybean expansion in Brazil. U.S. farmers might pay less for fertilizer and crop inputs, but Brazil still has cheap land to put into production. U.S. cropland might average $182 an acre in costs while it's closer to $44 an acre in Brazil, Gerlt said.

"That's the kicker, because they have hundreds of millions of acres of pastureland that could potentially come into crop land," he said. "It's very cheap. Our land, as you all know in this room, is not cheap at all. Our land is capped. And so, whenever we start talking about a trade war, that's one of the really big concerns, is that this (Brazilian) land is cheap. They can bring it in, and if we're giving them more opening into these export markets."

China accounted for 52% of soybean exports in 2024 while Mexico bought 10% of whole beans and 14% of exported soymeal. Canada also bought about 10% of U.S. soymeal.

U.S. crush capacity is expanding. There is more capacity than in the last trade war, and that offers some options, but now the crush is under pressure as well. There also is a growing volume of soymeal on the market. The renewable diesel market has taken a hit because of policy decisions such as California tightening up requirements and caps on feedstocks, especially soy and canola. Domestic biodiesel plants in January were only running at 40% capacity.

"Crush margins have fallen significantly ... So, this crush that we're seeing, it's coming under pressure as well. Margins just aren't good. We have a lot of soybean meal in the market that's being hard to move," Gerlt said.

Right now, nominal returns per acre for soybean producers is a $100 an acre loss.

Soybean farmers should expect on average about $30 an acre from the USDA economic assistance package, the new Emergency Commodity Assistance Program (ECAP). Those funds were meant to help offset some of the losses from 2024.

LOOKING AT OPTIONS

Looking at how to manage, Gerlt and Swanson encouraged farmers to look at their crop insurance options to offer some protections as a price floor.

The insurance price for corn is $4.70 per bushel, up 4 cents from last year.

The soybean price is $10.54, which is $1.01 below 2024.

Depending on a producer's coverage, the economists also pointed to the higher subsidy rate for the Enhanced Coverage Option (ECO), going from 44% to 65% in 2025. ECO is a county-level policy that can be added to an individual revenue policy and provides a band of revenue coverage between 86% and the farmer's choice of 90% or 95%.

That makes it cheaper to buy up extra protection.

"If you want to take advantage of those higher protection levels, you can do it at a cost that is more affordable than the past two years," Swanson said.

Gerlt said, "If you're thinking about managing risk, you already know you have $10.54 potentially locked in."

Producers will also need to weigh their Agricultural Risk Coverage/Price Loss Coverage (ARC/PLC) decision.

POSSIBLE GOVERNMENT RESPONSE

Agriculture Secretary Brooke Rollins on Sunday, March 2, told farmers the Trump administration would look to mitigate the impact of trade disruption on agriculture.

Meyer said farm groups should also be ready to ask what they want when it comes to increased market access and negotiations.

"What does ag want when this gets to the point of negotiation?" Meyer said.

Rollins has told USDA officials to see what might be needed to support producers "on the back end." Meyer said, "as we saw in previous trade friction with China, that we should be prepared to be able to formulate what those impacts are."

Meyer also indicated the Trump administration has indicated support for biofuels by detailing that support in executive orders on energy.

See, "2025 Spring Crop Insurance Prices," https://www.dtnpf.com/…

Also see, "Commodity Producers Brace for Impact: Trade Tariffs and Shutdown Risks Loom," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

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