Argentina’s Tariff Volatility and Soybean Trade Strain with China Pose Risks to 2025 Grain Market

A surge in global cereal production, projected to reach a record 2.412 billion tonnes in the 2025/26 season, is being overshadowed by geopolitical tensions and abrupt policy shifts, signalling a potential move away from globalised grain trade towards a more fragmented system.

The International Grains Council (IGC) forecasts a 3% year-on-year increase, led by maize and wheat, while the US Department of Agriculture (USDA) anticipates expanded global coarse grain trade, driven by exports from the United States and Ukraine.

However, this optimistic outlook is being challenged by a series of disruptive events. These developments have exposed vulnerabilities within the global food supply chain, with the soybean market serving as a prime example of the growing 'procurement gap' between major economies and its worldwide repercussions.

Argentina's Volatile Export Policy

In a significant move on 22 September, the Argentine government of President Javier Milei enacted a temporary suspension of export duties on key grains, including soybeans, maize, and wheat, effectively reducing tariffs from 25-31% to zero until 31 October.

The policy, detailed in Decree No. 682/2025 and also covering beef and poultry, was widely seen as an effort to attract urgently needed US dollars to stabilise the peso and support economic reforms amid a foreign exchange shortage. Analysts suggested the measure could bring billions of dollars in foreign exchange inflows.

However, the policy proved short-lived. Just three days later, on 25 September, the government reinstated the grain export duties, stating that preliminary foreign exchange targets had been met, though the meat tariff exemption remained.

This policy reversal triggered immediate market turbulence. Chicago futures for soybeans and corn fell sharply, dropping 5-7%, on concerns of a sudden influx of Argentine supplies. Although brief, the zero-tariff window was expected to release an additional 2-3 million tonnes of Argentine soybeans onto the global market, potentially squeezing the market share of competitors like Brazil and the United States.

Shifting Patterns in Soybean Trade

Concurrently, trade friction between the United States and China has significantly altered global soybean flows. As the world's largest soybean importer, China has substantially reduced its purchases from the US.

Official data from China's General Administration of Customs shows that from January to July 2025, China imported 42.26 million tonnes of soybeans from Brazil, a 25% year-on-year increase. In contrast, imports from the US fell 51% to 16.57 million tonnes during the same period.

This shift is attributed to retaliatory tariffs. China's Ministry of Commerce has stated that a recovery in US purchases 'depends on tariff removal'. Current overall tariff rates on US soybeans are reported to be around 34%.

USDA export sales data confirms that China has made no purchases of US soybeans since May 2025. The USDA forecasts the value of US soybean exports to China will fall from $12.8 billion in 2024 to approximately $6 billion in 2025.

This impasse is reported to be causing significant financial strain on American farmers, with some facing substantial projected losses and considering switching to other crops. Furthermore, China's increased procurement from Argentina during its zero-tariff period has further eroded US market share.

Market Impact and Supply Chain Reshaping

The convergence of these events is accelerating a reshaping of the global grain trade landscape.

Prices have faced downward pressure, with Chicago soybean futures hitting a decade-low following Argentina's temporary policy easing and the reduction in Chinese demand for US supplies. Logistical challenges, such as drought-related disruptions at the Panama Canal, are also adding to cost pressures.

While organisations like the OECD-FAO project growth in grain trade volumes towards 2034, market share is shifting. The 'Brazilianisation' of the soybean trade is becoming a dominant trend, with South America's role expanding.

Outlook: Short-Term Rebound vs. Long-Term Fragmentation

Analysts suggest a short-term market rebound is possible following Argentina's tariff reinstatement, which could tighten supplies.

However, the medium to long-term outlook points towards more entrenched trade fragmentation. Global grain trade is expected to continue growing, but with a greater emphasis on regionalisation. South America's share is projected to rise, while US exports may pivot towards other markets. The events of 2025 are likely to accelerate a global trend towards 'food sovereignty', prompting nations to increase investment in domestic production and diversify trade partners, moving the global system from integration towards a more multipolar structure.