The continuing uncertainty surrounding US trade policies is impacting new-crop corn and soybean sales the most, pulling them well below historical averages, according to a new report from CoBank’s Knowledge Exchange.
US new-crop soybean export sales totaling 518,100 tonnes as of May 1 were 88% under their historical five-year average and the lowest on that date since 2001. Corn sales of 2.2 million tonnes were 27% under their historical five-year average. All-wheat sales of 2.6 million tonnes were slightly ahead of their five-year average.
Many foreign buyers have reduced forward coverage and are buying in the spot market, complicating the picture for elevators and merchandisers that are heavily reliant on export demand, according to the report.
“Elevators and grain merchandisers with exposure to high-risk export markets, especially China, may be forced into widening new-crop basis to attract local demand,” said Tanner Ehmke, grains and oilseeds economist with CoBank. “Basis for corn, soybeans and wheat is strong now. However, if new-crop sales remain lethargic, basis could weaken substantially, particularly for soybeans in the northern Plains and northern Midwest with high exposure to the Chinese market.”
While US reciprocal tariffs with virtually every country have been paused for 90 days, it’s unclear what will happen when the pause ends on July 9. Currently there is a 10% across the board rate on all countries except for China, the tariff on which is now 30% after it rose to 145% after a tit-for-tat tariff escalation. China currently has its own 15% import tariff on US corn and wheat, and a 10% tariff on US soybeans and sorghum.
Only one trade agreement has been reached, with the United Kingdom, and the administration has hinted that it may announce a different set of tariffs given the lack of manpower to negotiate individual trade agreements with all countries, the report said.
China has been conspicuously absent with no sales on the books for US soybeans, corn or wheat. Since the tariffs initially were announced, China escalated purchases of soybeans from Brazil, suspended soybean shipments from three US companies and signed letters of intent with Argentine exporters to purchase soybeans, corn and vegetable oil.
Credit: ©COBANKMexico and Japan, the second and third largest markets for US soybeans, also are lagging well below historical purchases of new-crop soybeans for this time of year. Wheat sales into major markets like the Philippines and Korea lag historical levels, while corn new-crop sales to important destinations like Japan and Latin America are behind average.
Strong old-crop sales and domestic usage that has supported local basis largely have masked the drop in new-crop sales. Total US export commitments for the 2024-25 marketing year are up 27% for corn, 13% for soybeans and 14% for wheat year over year.
Processing margins for soybean crushers and ethanol producers have been positive while feeding margins from livestock and poultry feeders are strong.
For grain elevators and merchandisers that typically book grain sales out several months in advance, the headwinds of trade uncertainty remain firmly in place. While trade negotiations between the United States and China and numerous other countries have been announced, the lack of clarity on policy will continue to be a drag on US new-crop grain and oilseed sales, the report said.
However, Ehmke said some elevators and merchandisers will avoid the worst impacts and others may benefit from changing market dynamics.
“Elevators with the advantage of strong local demand from ethanol plants, soybean crushers, flour mills and livestock operators will be shielded from the loss of export business,” he said. “For those that do rely on export demand, lower rail rates could provide an opportunity for captive bushels to move east, while a weakening US dollar may attract new export demand from smaller markets to help backfill the loss of sales to China.”.
