Ongoing international trade policy uncertainty is significantly depressing new-crop sales of U.S. corn and soybeans, potentially forcing export-reliant grain elevators and merchandisers to seek more local demand, according to a new research brief from CoBank’s Knowledge Exchange. The lack of clarity surrounding tariffs with key U.S. trading partners, particularly China, has led many foreign buyers to reduce forward coverage and purchase in the spot market.
As of May 1, U.S. new-crop export sales for soybeans were down 88.2% from their five-year historical average, while corn sales dropped 26.9%. All-wheat sales were slightly ahead of their five-year average at the beginning of May.
“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.”
The report highlights that China has been conspicuously absent from U.S. new-crop markets, with no sales on the books for U.S. soybeans, corn, or wheat. Since tariffs were initially announced, China has reportedly increased soybean purchases from Brazil, suspended shipments from three U.S. companies, and signed letters of intent with Argentine exporters for soybeans, corn, and vegetable oil.
Other significant U.S. export markets are also showing reduced new-crop purchases:
- Soybeans: Mexico and Japan, the second and third largest markets for U.S. soybeans, are lagging well below historical purchase levels for this time of year.
- Wheat: Sales to major markets like the Philippines and Korea are below historical levels.
- Corn: New-crop sales to important destinations such as Japan and Latin America are behind average.
Strong old-crop sales and robust domestic usage have largely masked the drop in new-crop commitments so far. Total U.S. export commitments for the 2024-25 marketing year are up 27% for corn, 13% for soybeans, and 14% for wheat year-over-year. Positive processing margins for soybean crushers and ethanol producers, along with strong feeding margins from livestock and poultry feeders, have supported local basis.
However, for grain elevators and merchandisers that typically book grain sales several months in advance, the headwinds of trade uncertainty persist. The CoBank brief suggests that the lack of clarity on trade policy will continue to be a drag on U.S. new-crop grain and oilseed sales as the 2025-26 marketing year approaches.
Ehmke noted that some operations might be better positioned to weather the challenging trade environment. “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 reliant on export demand, Ehmke suggested potential mitigating factors:
- Lower rail rates could provide an opportunity for captive bushels to move east.
- A weakening U.S. dollar may attract new export demand from smaller markets, helping to backfill the loss of sales to China.
