The 2025/26 marketing year is poised to test the durability of U.S. grain merchandising systems. The old reliance on stable trade flows with China has eroded.
The winners will be those who can react quickly, hedge creatively, and leverage local demand while eyeing new, fragmented markets. The age of export certainty is over ; this is the era of proactive merchandising strategy.
As international trade policy uncertainty deepens particularly with China — U.S. grain exporters and merchandisers are experiencing a severe contraction in new-crop commitments.
This market fragility is unfolding against the backdrop of firm domestic crush margins and ethanol demand, offering partial insulation but not full protection.
Soybeans and corn remain the focal commodities, both in terms of declining forward sales and evolving global trade routes.
With China completely halting purchases of U.S. soybeans and corn for 2025 YTD, and aggressively contracting volumes from Brazil and Argentina, U.S. grain marketers are being forced into reactive cash market strategies, logistics-based arbitrage, and localized basis manipulation to stay afloat.
CBOT July 2025 soybeans (ZSN25) settled at $12.08 per bushel, down 1.2% on the week and now off 8.5% year-to-date. The bearish tone is driven by China’s conspicuous absence from the U.S. forward book zero purchases thus far in 2025 as it turns more aggressively toward Brazilian and Argentine supplies.
This ongoing pivot, combined with suspended shipments from select U.S. exporters, underscores a structural shift in global origination preferences.Northern Plains and Midwest basis levels, once resilient, are showing signs of softening.
Domestic processors remain a source of strength especially crushers with favorable margins but their pull alone cannot offset the vacuum left by muted Chinese buying.
The CoBank analysis earlier this month rightfully highlighted the potential need for basis widening in order to stimulate farmer selling, particularly if forward visibility remains clouded.
Corn futures (ZCN25, July 2025) closed at $4.46 per bushel, slipping 0.7% on the week and now sitting 11.4% lower year-to-date. The bearish fundamentals are compounded by broader macroeconomic factors ; concerns over inflation persistence, rising interest rates in key importing nations, and currency devaluation across parts of Asia all of which dampen appetite for long-dated grain purchases.
The weak pace of new crop export sales remains a red flag. With China absent and traditional buyers like Japan and Mexico underperforming, U.S. merchandisers are increasingly exposed.
Ethanol plants and livestock feeders are absorbing local supply, but without the export bid, the industry may soon need to reevaluate its forward hedging strategies and storage economics for the 2025/26 marketing year.
Within the soybean complex, divergence continues. Soybean meal futures for July closed at $357 per short ton, managing a modest 0.3% weekly gain, yet down 5.2% YTD. Domestic and regional demand from feed sectors remains constructive, but lacks the pace to reinvigorate flatlined global interest.
On the other hand, soybean oil saw renewed buying interest, rising 1.9% on the week to 47.60 cents per pound, bringing the year-to-date gain to 2.7%.
The continued expansion of U.S. renewable diesel capacity is fueling this upward momentum. Traders are closely watching California LCFS (Low Carbon Fuel Standard) credits and D4 RIN values, which continue to incentivize soybean oil usage in biofuel blends.
Ethanol remains a bright spot in the domestic energy-agriculture crossover. Front-month June contracts traded at $2.17 per gallon, gaining 0.8% weekly and 3.2% YTD.
Midwest demand fueled by favorable gasoline blending economics and ongoing seasonal driving activity is offering stable margins for processors.
Rail freight softness and weaker corn basis in interior regions are also aiding ethanol producers’ competitiveness, particularly those supplying to the East Coast and Southern U.S.
The continued uncertainty in global trade especially vis-à-vis China adds layers of complexity for U.S. exporters, merchandisers, and inland elevators. With new-crop bookings languishing well below five-year averages, and key foreign markets diversifying away from U.S. supply chains, the outlook for the next marketing year appears increasingly dependent on domestic demand resilience and potential tailwinds from a weakening U.S. dollar.
In the interim, local crush, ethanol, and feed demand will dictate basis behavior and cash flow dynamics. While strong old-crop commitments and a firm domestic processing base are cushions, the evolving geopolitical trade landscape will demand agility, transparency, and re-pricing strategies from all players in the U.S. grain trade ecosystem.
China’s Position
The shift in China’s sourcing strategy suggests a permanent diversification trend. U.S. exporters can no longer depend on Chinese seasonal buying patterns to drive basis or flat-price strength.
| Route | Prevailing Rate | Trend | Notes |
|---|---|---|---|
| US Gulf → China (Panamax) | $58–60/MT | Stable | Brazil remains cheaper by $12–15/MT |
| Santos → China (Panamax) | $45–48/MT | Firm | High congestion at Paranaguá |
| US Gulf → Rotterdam | $31/MT | Stable | Limited export volumes keeping rates low |
| Barge (IL River → Gulf) | $20–23/MT | Lower YoY | Some elevators using barges for domestic transfers |
Freight parity continues to disadvantage U.S. Gulf shipments to Asia.
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