By Jamie Martin
Persistent uncertainty in U.S. international trade policy is creating challenges for grain elevators and merchandisers, particularly those dependent on exports.
Ongoing tariff disputes with key trading partners like China have dragged new-crop export sales below historical norms, leaving many buyers hesitant to commit and shifting instead to spot market purchases. This unpredictability is making it harder for elevators and merchandisers to plan ahead.
A recent CoBank Knowledge Exchange research brief warns that if this trend continues, grain companies tied to exports may head into the 2025/26 marketing year increasingly dependent on local demand which isn’t guaranteed in all areas.
“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.”
As of May 1, new-crop sales of U.S. soybeans had dropped 88.2% below their five-year average, while corn fell 26.9%. Only wheat managed to stay slightly above its average.
China has notably refrained from purchasing U.S. corn, wheat, or soybeans, instead increasing imports from Brazil and signing deals with Argentine suppliers.
Other major markets are also slow to buy. Mexico and Japan, the second and third largest markets for U.S. soybeans, are behind on new-crop purchases.
Wheat and corn sales to countries like Korea, the Philippines, and parts of Latin America are also down.
Despite these challenges, strong old-crop sales and steady domestic demand have helped support prices. Positive margins for soybean processors and ethanol producers, along with solid feed demand, have kept basis firm for now.
“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,” Tanner Ehmke added.
“For those that do rely on export demand, lower rail rates could provide an opportunity for captive bushels to move east, while a weakening U.S. dollar may attract new export demand from smaller markets to help backfill the loss of sales to China.”
Photo Credit: gettyimages-giovanni1232
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