New Trump China Tariff Threats Send Grains Complex Down

The grains market was roiled by new threats by the US president of an additional 100% tariff on Chinese goods. However, these statements are largely expected to be rolled back. However, the fundamentals all suggest a well-supplied market, barring the possibility of a drought in Australia.

A non-expected intensification of the US trade war with China has sent all grains downward. President Trump escalated his anti-China rhetoric last Friday, but history suggests there may be a climbdown, resulting in a market recovery.

Lower wheat production is now expected in Australia, and this dry weather seems to be the only potential upside for the wheat market.

With lack of fundamental news from the US thanks to the shutdown, the market will focus on how the US/China trade war evolves this week. In any case, there is no supportive outlook for grains with ample supply of both corn and wheat.

There is no change to our estimate for Chicago corn to average USD 4.18/bushel during the 2025/26 (Sep/Aug) crop. The average price since September 1 is running at USD 4.16/bushel.

The market trading began trading without US statistics or any real insight on fundamentals last week as the release date for the WASDE came and went. There were also no export sales, no COT for a second consecutive week and no crop progress report. There was a mildly negative sentiment due to harvest pressure and ample supply for both corn and wheat.

The Trump administration announced on Friday that the US could increase tariffs on Chinese goods by 100%, which caused another selloff in soybeans, dragging corn and wheat lower. US soybean prices have been trading at their lowest levels in five years.

Source: USDA

Despite an absence of US government data, the market expected the October WASDE to revise US corn yield lower to 185 bushels/acre from 186.7 bushels/acre in September.

The French corn condition was 62% good or excellent, unchanged week-on-week and versus 78% for the same period last year. Harvesting is advancing fast, at 37% complete compared with just 5% last year but in line with the five-year average of 36%.

Corn harvesting in Russia is 20.8% complete, while planting in Argentina is 25.6% complete – ahead of the 17.7% recorded at the same time last year.

Wheat was still pricing in the ample stocks of the previous week’s USDA quarterly stock report, although European futures rallied on expectations of higher exports. Despite the Friday selloff, the week was positive on Euronext.

The positivity was caused by an anticipated downward revision in Australian wheat production figures. Rainfall in September was much lower than the long-term average with some key regions receiving less than half of the average. As Australia is a main wheat exporter, this will benefit European exports.

On the other hand, the Rosario Stock Exchange in Argentina has raised its 2025/26 wheat production estimate to 23 million tonnes from 20 million tonnes. However, this was already priced in as BAGE announced a projection of 22 million tonnes two weeks ago.

The expectation is that the October WASDE report, if released, would have projected a reduction in Australian production and an increase in Argentinian production. In the September report, the countries were expected to produce 34.5 million tonnes and 19.5 million tonnes, respectively. Whether one will offset the other remains to be seen.

Winter wheat planting in France has started and is 5% complete – largely in line with last year and the five-year average. Russian wheat is 93.7% harvested and winter wheat planting is 60.7% complete. Argentinian wheat is 96.4% good or excellent.

Tags: tariff, trade war, China, corn, Grains, US, Production, wheat, Market