Bulker fallout looms as trade tensions threaten US soyabean season
THE INITIAL effect of Trump 2.0 trade policies has been far more negative for US businesses than for global ship operators. The broader fallout for shipping is not here yet, but could arrive soon.
On the container side, US businesses have been hammered with over $100bn in new import levies to date, yet containerised import volumes in the first eight months of 2025 increased 3% year on year (y/y), largely due to first-half frontloading.
Pressure on US container shipping demand is expected to come with a lag, at the back end of this year and into 2026.
There’s a similar delayed pattern on the dry bulk front, for a different reason.
China has an overall tariff rate of 34% on US soyabeans, according to the American Soybean Association. US agricultural sales to China have collapsed. According to cargo inspection data from the US Department of Agriculture, US grain loadings aboard bulkers bound for China have largely ceased since late April.
Nevertheless, total US grain exports in January-August were up double digits y/y due to booming shipments of corn to non-Chinese buyers.
The lag effect on the US-China trade conflict on dry bulk is the result of to crop seasonality. The brunt of consequences will come in the next several months, during the US soyabean export season.
“The tariffs have had a limited impact on soyabeans to this point as they occurred outside the major export window. That is quickly changing,” warned the ASA in a new white paper.
China frontloaded cargoes from South America this year to prepare for the absence of US cargoes in 2025-2026, posting record soyabean imports in May-August.
“China currently has zero new crop export orders for US soyabeans for 2025-2026,” said the ASA. Other buyers have not picked up the slack, with new crop sales down 81% from the five-year average.
“The bottom line is that if China doesn’t come back this season, we will lose business,” said Jay O’Neil of HJ O’Neil Commodity Consulting in an interview with Lloyd’s List.
That would be a negative for panamax rates, particularly given the earlier pull-forward in South American cargoes to China.
“The dry bulk industry may look at this January to August and say we’re okay. Well, not necessarily, because the real negative demand effect could happen in the next few months, assuming that the US and China don’t come to terms,” said O’Neil.
Corn cargoes boost export volumes through August
The USDA cargo inspection data highlights how positive US exports have been for bulker demand in the first eight months of this year.
US grain exports in January-August totalled 90.2m tonnes, up 14% y/y. Of this year’s volumes, 80% was shipped aboard bulkers, 16% went by rail or truck to Mexico, and 4% was containerised (primarily soyabeans).
US grain export volumes shipped aboard bulkers totalled 72.7m tonnes, up 16% y/y. This equated to around 1.2m tonnes of additional bulker cargoes per month versus the same period in 2024.
Bulk corn volumes surged to 42.2m tonnes in January-August, up 41% y/y, with bulk wheat cargoes reaching 14m tonnes, up 12% y/y.
Bulk soyabean volumes fell by just under 500,000 tonnes, or 3% y/y, to 15.8m tonnes, as declines to China during the off-season were offset by other buyers.
January-August bulk volumes of other grains fell by 3.2m tonnes due to a plunge in Chinese buying of US sorghum that was not offset elsewhere, according to the USDA inspection data.
US bulk grain shipments to China plunged by 63% or 10.1m tonnes y/y in the first eight months of 2025. Bulk soyabean volumes fell by 38%. The inspection data showed no US corn or wheat cargoes aboard China-bound bulkers (although there have been shipments of containerised corn), and an almost complete loss of sorghum volumes.
The 3.7m tonne y/y decline in bulk soyabean shipments to China was offset by gains to Mexico, Japan and Colombia, as well as higher volumes to elsewhere in Latin America, and to Europe and Asia.
The 1.2m tonne y/y decline of bulk corn shipments to China was more than offset by much higher buying elsewhere, led by South Korea (up 3.3m tonnes y/y), Japan (up 1.3m tonnes), Colombia (up 812,032 tonnes) and Mexico (up 374,365 tonnes).
“We’re missing a major buyer — China — and not just for soyabeans but for all grain commodities,” said O’Neil. “But corn has been terrific for exports. The biggest reason is Mexico and the second biggest reason is Japan.”
In terms of total volumes (including bulker, container and truck/rail shipments), Mexico is by far the largest buyer of US grain exports. Japan is a distant second.
A caveat for bulker demand is that recent upside from higher volumes has been partially offset by shorter distances, as long-haul voyages to China have been replaced by shorter-haul moves to Mexico, Colombia and other Latin American buyers such as Guatemala and the Dominican Republic.
Another negative for dry bulk shipping demand, related to Mexico, is the rising use of rail as Mexico grows in importance as a buyer.
US grain volumes to Mexico shipped by land (almost all rail, plus some trucking) in January-August totalled 14.2m tonnes — more than the entire volume shipped by ocean to number-two Japan.
Rail volumes accounted for 65% of Mexican grain imports from the US in the first eight months of this year, and were up 431,277 tonnes y/y.
‘Dire’ situation for US soyabean exports
US farmers are already suffering under Trump 2.0 due to a combination of falling crop commodity prices, higher costs for fertilisers and machinery, and labour constraints due to the immigration crackdown.
It’s about to get worse for American farmers. The outlook for 2025-2026 soyabean exports is increasingly ominous, spurring the ASA to plead with US president Donald Trump for relief.
“US soyabean farmers are standing at a trade and financial precipice,” wrote the ASA in a letter to Trump, calling the farmers’ situation “dire” and warning that they “cannot survive a prolonged trade dispute with our largest customer”.
US trade talks with China are scheduled to extend until mid-November. In a normal year, peak export volumes of US soyabeans load in October.
“The further into the autumn we get without reaching an agreement with China on soyabeans, the worse the impacts will be on US farmers,” said the ASA.
The next few months will have an outsized impact on total US grain exports for the year, and consequently, for panamax bulker demand. A steep drop-off in US soyabean loadings in the months ahead could offset some of the y/y gains from corn through August.
China accounted for 60% of US soyabean export volumes transported via bulkers in full-year 2024. US bulk soyabean exports to all destinations in the final four months of 2024 accounted for 25% of full-year bulk exports of all grain commodities, according to USDA data.
“This is the time of year when the sun shines, when we make hay, and if China doesn’t come back in, we miss that window of opportunity,” said O’Neil. “We will gain some export business from other countries that Brazil won’t have extra capacity to supply, but it would be a net loss for exports.”
Longer-term concerns for US farm exports
The longer-term concern of US farmers, beyond the current soyabean marketing season, is that trade tensions and tariffs could increasingly push buyers away from the US — to Brazil, in particular.
In contrast, dry bulk executives view a shift towards South America and away from the US as generally positive for freight rates.
The voyage from Santos, Brazil to Shanghai is twice as long as from the US Pacific Northwest to Shanghai, and slightly longer than from the US Gulf to Shanghai via the Panama Canal (albeit shorter than the Cape of Good Hope route from the US Gulf to Shanghai). In addition, South American grain ports are much more prone to congestion than US ports, which decreases effective vessel supply.
“The tariffs are not simply doing temporary damage. They’re doing permanent damage,” said O’Neil.
He noted that the pitch of US agricultural sector has long been: The US is a reliable buyer, unlike South America, which has more interruptions in exports.
“But the tariffs are sending a message that we’re no longer a reliable buyer, and that’s going to encourage further expansion in Brazil, the Black Sea and other areas, and it’s going to motivate our foreign buyers, not just China but also other countries, to diversify to a greater degree than they already have.
“My fear, personally, is that we’re not just hurting soyabean exports for 2025-2026, but we’re probably doing damage to corn and soyabean exports for decades.”
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