Trade Uncertainty is Depressing New-Crop Sales

Tanner Ehmke and Emmie Noyes

May 22, 2025

Key Points

• Ongoing trade uncertainty has discouraged sales of new-crop grains and oilseeds – particularly corn and soybeans. Despite the announced 90-day pauses on the U.S.’s “reciprocal” tariffs, the constant shifting in trade policy continues to disrupt long-term trade decisions and relationships.
• Foreign buyers have reduced forward coverage and are buying in the spot market, complicating the outlook for grain elevators and merchandisers dependent on export demand.
• Grain elevators and merchandisers benefiting from strong local demand from ethanol plants, soybean crushers, flour mills and livestock and poultry operators have been shielded from trade uncertainty.
• The longer the uncertainty continues to drag on sales of new-crop exports, export-dependent grain elevators and merchandisers risk entering the 2025/26 marketing year with greater reliance on local demand, which may be scarce in some regions.
• 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.

Introduction

The trade outlook for grains and oilseeds remains clouded by ongoing trade policy uncertainty. On April 2, President Trump announced new “reciprocal” tariffs on imports from virtually every country except on products that fall under the U.S.-Canada-Mexico Trade Agreement. The reciprocal tariffs were later paused for 90 days and replaced with 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 U.S. corn and wheat, and a 10% tariff on U.S. soybeans and sorghum. Since the tariffs were announced, China accelerated its purchases of soybeans from Brazil, suspended soybean shipments from three U.S. companies, and signed letters of intent with Argentine exporters to purchase soybeans, corn, and vegetable oil.

Further headwinds of trade uncertainty unfortunately are far from over. It is unclear what will happen when the tariff pause ends on July 9. 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.

Trade Impact

China has been conspicuously absent with no sales on the books for U.S. soybeans, corn or wheat. By May 1, China has normally booked on average over 2 MMT of soybeans from the U.S., 1.6 MMT of corn and token amounts of wheat.

Japan and Mexico are the only other notable trade partners for U.S. grains and oilseeds but are also lagging behind historical purchase paces. Mexico’s bookings for new-crop U.S. soybeans are substantially below normal for this time of year. Corn new-crop sales to Japan and Latin America are notably below average, and wheat sales into major markets like the Philippines and South Korea lag historical levels.

While basis for corn, soybeans and wheat is relatively strong now, new-crop basis risks weakening substantially if new-crop sales remain lethargic – particularly for soybeans in the northern Plains and northern Midwest with high exposure to the Chinese export market.

Elevators and grain merchandisers may potentially benefit from falling rail rates that provide an opportunity for captive bushels to move east, while a weakening U.S. dollar may attract new export demand and help U.S. grains and oilseeds to backfill into smaller markets outside of China. Ongoing drought conditions in northeast China may also force China to import more grains and oilseeds from the U.S.

Outlook

Tariff uncertainty with key trading partners, particularly China, has pulled new-crop sales well below historical averages. While trade negotiations between the U.S. and China and numerous other countries have been announced, the lack of clarity on trade policy will continue to be a drag on U.S. new-crop grain and oilseed sales. After the 90-day pauses are over in July, the U.S. could return to raising tariffs on countries that haven’t struck trade deals with the U.S., risking a return to retaliatory tariffs or restrictions on U.S. ag exports.

The ongoing trade uncertainty risks widening the basis for new-crop bids, especially in regions highly exposed to the export market. Not all grain elevators and merchandisers are impacted, though, by trade uncertainty. Those benefiting from strong local demand from ethanol plants, soybean crushers, flour mills and livestock and poultry operators will be shielded from the loss of export business. Those with high exposure to China, though, should closely evaluate new-crop trade risks and appropriately bid a margin into new-crop basis. The longer the uncertainty continues to drag on sales of new-crop exports, export-dependent grain elevators and merchandisers risk entering the 2025/26 marketing year with greater reliance on local demand, which may be scarce in some regions. A steep widening of new-crop basis will be the likely result.