Karen Braun: The role of China in US agriculture has changed.

Last month, the prospect of renewed Chinese demand for U.S. agricultural products sparked excitement on?grain market. However, enthusiasm has faded and no immediate purchases have been made.

It was not surprising that the initial reaction was bullish. China has been a driving force in U.S. agricultural growth, helping to drive record soybean exports and grain prices, as well as emerging as a major purchaser of everything from beef to corn. The trade agreement last month, which included at least $17 billion of U.S. agricultural sales beyond existing soybean agreements, revived hopes that China could once again be a major driver of growth for American farm exports.

The dynamics have changed over the years due to trade tensions, and South America’s growth. China's importance to U.S. agricultural production remains high, but its contribution varies depending on the commodity.

SOYBEANS: China left the U.S. market, not the soybeans

China's dependence upon U.S. soyabeans has declined dramatically over the past few years, but its influence on the global soybean markets has not. Since nearly two decades, the Asian buyers' share of global imports remained fairly constant at around 60%. Chinese purchases of U.S. soya beans have dropped sharply from record levels earlier in this decade, as Brazil increased production and exported more. According to the U.S. Department of Agriculture, the volume of U.S. soyabean exports to China in the 2025/26 crop season that ends on August 31 is expected to drop by almost 50% compared to the previous year, to a record low of 19 years.

Industry estimates show that by the end May, China had met more than 90% its needs for 2025/26. This pace is on par with the previous year, thanks to an increase in South American purchases.

Recent trade deals suggest that U.S. soyabean exports to China may double in 2026/27. However, the overall picture of soybean exports is not as rosy. The USDA projections indicate that U.S. exports of soybeans to other countries would drop to a record low in 2026/27 if China's assumed share is excluded. This could be because the demand for U.S. beans from one partner might impact the demand from the others.

CORN: HEALTHIER IF CHINA IS NOT INCLUDED?

It couldn't have been more different in the case of U.S. corn imports. Chinese purchases accounted for nearly one-third (or 2,75 billion bushels) of U.S. Corn shipments in 2020/21. Many at the time considered China to be crucial for furthering export growth. This record was broken without Chinese participation in 2024/25, and 2025/26 is expected to see shipments reach a new high of 3.3 million bushels.

Mexico, for example, is a reliable long-term buyer of corn from the United States.

USDA's forecast does not indicate that China will be a significant buyer of corn in 2026/27.

This doesn't mean that the Chinese demand is no longer important or that it would not have positive market implications.

If China were to return as a major buyer of corn, would the total U.S. exports increase further or would higher prices displace existing demand as it appears to be happening for soybeans.

BEEF: TRADE DEAL WEAKNESSES EXPOSED

Beef is a product that falls between corn and soybeans, but presents different tradeoffs. China was a major customer of U.S. beef importers just a few short years ago. U.S. officials want to bring that business back after the recent trade agreement.

The U.S. beef market has reached "record" highs and the cattle herd in the United States is at a low level not seen for 75 years.

U.S. officials have highlighted China's appetites for lesser-valued cuts and variety meats, implying that Chinese consumers buy products Americans do not consume as often.

This portrayal is incomplete and leaves out important details.

In the past, U.S. exports of beef to China were largely products that were consumed domestically, as is also seen in other U.S. buyers.

China is a major buyer of U.S. cuts and offal.

Although the Chinese demand for lower-value cuts may benefit U.S. ranchers in some ways, it also increases competition for limited supplies.

It may be worth examining the idea that beef exports to China could increase without impacting on the domestic market.

NEW MARKET, OLD THINKING?

Soybeans and corn, as well as beef, help explain why China’s role in U.S. Agriculture cannot be defined with a single narrative.

But grain markets react to Chinese purchases as if the effects are universal across all sectors. Even though purchase commitments are not a guarantee, they can still cause sharp movements in futures and speculative positions.

The prospect of renewed Chinese purchases helped to push speculators’ combined positions in U.S. grain and oilseeds at record bullish levels.

This was a logical reaction: a stronger Chinese economy has usually led to better prospects for U.S. agricultural production for the last two decades. Now, however, the impact is less clear.

The markets will continue to react to China related developments. However, the most important question is not whether China matters but rather where it matters.

You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.

(source: Reuters)