KANSAS CITY — While weather typically is the driving force in the grain and oilseed markets during the summer growing season, this year it may be trumped by trade issues between the United States and China that escalated in mid-June. The risk is especially great for soybeans, which is the most valuable U.S. agricultural export to China and which passed corn as the most-planted U.S. crop this year.

The Trump administration on June 15 announced additional 25% duties on about $50 billion worth of Chinese goods imported by the United States. China retaliated, quickly announcing additional 25% duties beginning July 6 on about $38 billion worth of goods that it imports from the United States, including soybeans, corn, wheat, orange juice, whiskey and about 650 other items. The administration upped the ante on June 18, threatening to impose a 10% tariff on an additional $200 billion worth of imports from China.

There of course are mixed opinions about the impact of a trade war on U.S. grain and oilseed markets. One camp suggests much of the threat already has been priced into the market, evidenced by sharp declines in most futures in the past month, and that the market now may refocus on summer weather. Some believe that, in the end, a trade war between the world’s two largest economies will be avoided because the cost would be too high on both sides, not just for U.S. agriculture. Still others look at the devastation that may play out if a full-blown trade war develops.

The escalation in trade rhetoric couldn’t be happening at a worse time for grain and oilseed markets, at least from a farmer’s view. Despite a late start to spring planting, the U.S. Department of Agriculture has been reporting nearly historically excellent corn crop conditions as well as strong ratings for soybean and spring wheat crops, while winter wheat has seen some harvest pressure, albeit less than usual because of the smaller hard red winter harvest.

Soybean, corn and wheat futures have fallen precipitously in the past few weeks, but early last week was especially severe in what was called panic selling by commodity funds set off by fears of a trade war with China. The funds already had sold more soybean and corn contracts in Chicago during the two weeks ended June 12 than during any other two-week period on record. The nearby Chicago July soybean future fell below $8.50 a bu on June 19 for the first time since December 2008 — a 9½-year low, corn futures sank to life-of-contract lows and wheat futures declined for the fifth consecutive day.

Soybean, corn and wheat futures closed with small to moderate gains on June 20, leading some to suggest futures may have bottomed, although not all agree with that scenario. And others suggested that much of the potential damage from a trade dispute with China already may have been priced into soybean futures, but the June 19 market action suggests there may still be more downside in futures.

The importance of trade with China can’t be overstated for many sectors, but U.S. soybeans, and consequently soybean farmers, may stand to lose the most if the threats build into an all-out trade war. Farmers had to plant this year’s crop under a cloud of uncertainty and now must wait to see what unfolds with the crop in its early stages and harvest a couple months away.

An Iowa State University economist estimated Iowa would lose $624 million in soybean sales, and an Ohio State University study estimated Ohio farmers would lose 59% of their income if a 25% tariff were added to U.S. soybean exports to China. Iowa was the nation’s second largest soybean producer and Ohio the seventh largest producer in 2017. Iowa’s soybean crop was valued at $5.2 billion last year. Total U.S. soybean exports to China were valued at $12.4 billion last year.

Iowa State University economist Chad Hart suggested China still likely would be the United States’ largest buyer of soybeans even with additional tariffs, but it would slow the market and shipments would be reduced.

Another analyst suggested U.S. crop farmers had lost $100 per acre just in the first half of June from falling land prices related to the trade dispute, which comes at a time when farm revenues are at multi-year lows.

While China isn’t a significant buyer of U.S. corn and wheat, those crops have their own trade concerns. Trade issues with Mexico, the largest buyer of U.S. corn, have threatened that outlet. And U.S. wheat has struggled to get a footing in recent export tenders because it still is overpriced relative to foreign competitors, especially Russia and the Black Sea region.