China’s grains, oilseeds procurement to see limited impact from US agricultural tariffs

China's latest decision to impose countertariffs on US agricultural products from March 10 would likely have a limited impact on imports of grains and oilseeds as the country has been lowering its reliance on US products and diversifying the supplier pool in recent years, market participants said March 4.

Regional participants had previously noted that wheat and corn markets could see a muted impact in the event of a US-Sino agricultural trade dispute, given China's absence from the international wheat and corn trade since late 2024.

The US share of Chinese wheat imports averaged around 17% in the past five years, compared to Australia's 37% and Canada's 23%, based on Chinese customs data.

"China has not been in the market for US wheat for months. Besides a large domestic crop, it can also procure wheat from other exporters such as Australia and Canada," said a grains trader.

China has increased its share of Russian wheat imports and most recently approved Argentinian wheat and corn imports, trade sources said.

"The Chinese have been wary about the whole situation and didn't want to touch US grains to begin with, so the impact isn't that big," said a Singapore-based trader.

A buyer source from a Chinese feed milling company added that there would be no impact on corn markets as "[China imports] most likely Brazil corn anyway."

The outlook extends to soybeans as well, which could have been the most vulnerable of the lot given China's stronger dependence on the US. In 2024, the country imported 70% of its soybeans from Brazil and 21% from the US, according to Chinese customs data. China has been steadily reducing its imports of US soybeans since 2021 from 32 million mt to 22 million mt in 2024.

"Purchasing soybeans from Brazil throughout the year will be sufficient, too," said a China-based broker.

Market participants expected Brazilian soybean basis to firm after China's retaliatory tariffs on US soybeans.

Platts, part of S&P Global Commodity Insights, assessed soybeans FOB Santos basis for April loading at 35 cents/bu over the CBOT May (K) contract and the FOB Paranagua basis for April loading at 25 cents/bu over the CBOT May (K) contract March 3.

China's domestic soybean meal prices are anticipated to experience short-term volatility, however, crushers expect them to remain stable in the long term.

Prior to the tariff announcement, six cargoes of US soybeans had been shipped from the US Gulf and are anticipated to arrive in China in the first half of April. These cargoes will not be impacted by the tariffs as they were dispatched prior to March 10, according to a buyer in China.

"Overall, the impact for now seems to be pretty limited. Even in sorghum, it [US sorghum] is mainly imported for brewing purposes, and Brazil and Argentina can fill the gap in the future. For feeding, China can rely on corn," said a grains and oilseeds trade source.

Asia participants eye opportunities

A Sino-US agricultural trade dispute could allow Southeast Asia to capitalize on the shifting trade flows, market sources there said, citing potential pressure on US grains and oilseeds products competing to find new homes outside China.

"If they [China] aren't there to take US wheat, the supply could flow into other Asian markets, and that's good news for us," said a Southeast Asian miller.

Nonetheless, a full-blown trade dispute could inject some support into the global grains and oilseeds markets and more importantly, fuel volatility in the foreign exchange market that would affect regional buyers that pay for their imports in dollars and sell in local currencies, some participants noted.

"Sometimes we just can't pass on the additional costs to consumers, so we'll have to navigate the currency market cautiously this year," said an Indonesian flour miller.