China’s shifting grain game is creating ripples across the global market

China’s evolving grain import strategy reflects its increasing focus on domestic production to enhance food security and support local farmers. This shift is reshaping the global grain trade, particularly the tonne-mile demand for Panamax vessels, by reducing their rates on specific trade routes.

China’s changing grain import dynamics
China’s grain imports have been on a rise through 2020 to 2023, with a peak – 60 million tonnes imported in 2021. However, Mexico overtook China to become the largest grain importer in 2024, with the latter’s imports declining 13% YoY. This decline could persist in 2025 as well, signalling the country’s shift toward greater self-sufficiency.

China remains one of the world’s largest grain producers and also a significant food exporter as of 2024. At the 2023 Central Rural Work Conference, China re-emphasised the importance of grain production and supply. The impact of this focus was clear in 2024, when the country cancelled or delayed shipments of US and Australian wheat, which contributed to a 37% YoY decline in China’s combined wheat and corn imports at the end of the year. Meanwhile, its global share of wheat and corn imports dropped 5 percentage points, following the peak of 12% in 2023.

As per the Chinese Government, the country aims to meet nearly 90% of its grain needs (including wheat and corn) through domestic production by 2032 in response to shifting geopolitical dynamics and ongoing efforts to enhance food security. By 2035, China plans to develop a more diversified food system that aligns with the evolving nutritional and consumer preferences of its population.

Phasing out imports to boost homegrown grains
The surge in China’s grain imports post-2020 was largely influenced by the Phase One US-China trade agreement in which China committed to purchase significant quantities of US corn. Even though the deal expired in 1Q22, American corn exports to the country surged through 2022 before declining in 2023 as Brazil, a late entrant in the corn export market, replaced the US to become China’s largest corn exporter. Brazil also remained the largest corn exporter for China in 2024, although the latter’s corn imports fell nearly 50% in the year.

As China shifted to a supply-side approach to support domestic corn prices by limiting imports, the USDA revised China’s corn import estimates to 10 million tonnes for the marketing year 2024-25, down nearly 25% from earlier projections. Due to the strong corn harvest, China’s production rose 12 million tonnes in 2023-24, allowing it to build a surplus for feed and further reducing the need for imports in 2024-25, as production continues to rise.

Wheat in the cart, but less on the ships
China, the world’s second-largest wheat importer, reduced its imports by 7% YoY due to abundant domestic supply and well-stocked inventories. With the country’s wheat production projected to reach a record high of 140 million tonnes in the 2024-25 marketing year (July-June), the need for wheat imports will diminish further, supporting its goal to protect local farmers and stabilise domestic prices.

In fact, China refused to take four shipments, each carrying 60,000 tonnes of wheat, in February 2025, while three of the four abandoned batches originated from Australia. Meanwhile, no new grain orders were placed for March, and no shipments are scheduled until April. As a result, the USDA also cut its wheat import forecast for China by nearly 25% for 2024-25.

China’s grain shift sets sail for lower shipping rates
China’s reduced wheat and corn imports are set to affect global shipping demand. The decline in imports and rising domestic production will weigh on the tonne-mile demand for Panamax vessels, which, as per Drewry AIS, handle 75% of China’s grain trade. Competition among exporters, particularly from Brazil and Australia, will increase further putting downward pressure on shipping rates.

Panamax Baltic rates continued to fall as we entered 2025. Comparing the weekly rates YoY, we arrived at an average decline of 40% till date. More specifically, rates on the Australia-China grain route have been trending downwards since 2H24, reflecting a decline in grain trade between the two countries. Although rates usually dip in the first quarter due to seasonality, the January 2025 rates were nearly 50% lower YoY. We believe if imports continue to decline and domestic production continues to rise Panamax rates are unlikely to recover to March 2024 levels in the near future on this route.
Source: Drewry