Insight Focus
US and China have agreed on a major agricultural purchase framework. The US imposed sanctions on Russian oil, disrupting global energy markets. The IMO delays its Net-Zero shipping framework, while Russia expands grain exports to Southeast Asia.
Major US–China Agri Purchase Framework Agreed
The US and China have moved closer to stabilising their strained trade relationship, with officials announcing a “substantial framework” agreement that includes a major agricultural purchase plan. The development comes ahead of a planned meeting between President Donald Trump and Chinese President Xi Jinping, where the two leaders are expected to finalise the details of the deal.
US Treasury Secretary Scott Bessent, who met with Chinese Vice Premier He Lifeng and other senior officials in Kuala Lumpur, said Beijing has agreed to make “significant” new purchases of US soybeans and other farm commodities. The commitment, if confirmed by China’s commerce ministry, would mark a big shift after months of reduced buying and escalating tariff threats that rattled global grain markets.
Source: GACC
For US farmers, the announcement offers a welcome signal of improving export demand at a time when farm incomes are high, storage capacity is tight, and farm debt is poised to hit record highs.
While Chinese crushers have already built sizable inventories from South America, high premiums for Brazilian soybeans in recent weeks have narrowed their price advantage – prompting some Chinese buyers to reconsider US cargoes for December and January shipments. That pricing dynamic, combined with easing trade tensions, appears to have opened a window for renewed US sales heading into 2026.
Cost of Tariffs Reaches USD 35 Billion
The easing tensions between the US and China come amid a broader sense of stability in global trade. After months of volatility, companies are beginning to adapt to the tariff environment, with many rerouting supply chains or shifting production to offset higher costs. Global firms have already absorbed more than USD 35 billion in US tariffs, but analysts say the impact is starting to moderate.
According to the IMF, one reason the global economy has held up better than expected is that most countries have chosen not to retaliate against US tariffs. That restraint has helped avoid a damaging escalation in trade barriers. The organisation now estimates that the effective US tariff rate has fallen to around 9–10%, lower than originally projected, as new trade deals with Europe and Asia ease the overall burden.
For agriculture, this calmer backdrop offers some relief. Fewer retaliatory measures and a more predictable tariff outlook reduce input cost pressures and support the gradual recovery in US export demand.
US Imposes Sanctions on Russian Oil Producers
The US has intensified its economic pressure on Moscow, imposing sweeping sanctions on Rosneft and Lukoil, Russia’s two largest oil producers, in an effort to cut off funding for the Kremlin’s war in Ukraine. Announced on October 23, the move marks President Trump’s most forceful use of energy sanctions yet and immediately roiled global markets.
Within hours of the announcement, Brent crude and West Texas Intermediate (WTI) both surged, reflecting fears of tighter global supply. However, prices have since retreated as markets stabilised following a three-day decline amid shifting inventory data and easing geopolitical tensions.
Source: Investing.com
The sanctions effectively bar companies purchasing Russian oil from using the US dollar-based financial system, restricting access to Western banks, insurers and shipping services. This poses a major challenge for China and India, which together account for more than 80% of Russia’s crude exports since 2022. Reports suggest some refiners in both countries paused new purchases last week amid uncertainty over compliance risks.
The EU also faces renewed pressure to phase out remaining Russian LNG imports, despite progress in reducing pipeline gas dependence. Analysts say the measures could strip millions of barrels per day from legitimate trade, tightening supply and keeping energy costs elevated. Still, Russia is expected to continue exports through “shadow tankers” and non-dollar transactions, softening the sanctions’ full effect.
Source: The Guardian (Data from Kpler, Eurostat, ENTSOG)
Russia Seeks New Grains Markets in SE Asia
As Western sanctions tighten around Russia’s oil exports, Moscow is stepping up efforts to expand its agricultural trade, particularly across Asian markets.
Among Russia’s key targets is Indonesia, where exports include wheat, corn, soybeans and barley. Wheat shipments to Indonesia resumed in October after a nine-month pause, following Jakarta’s approval of updated safety certificates for Russian grain.
Source: Global Trade Tracker
The Russian Union of Grain Exporters and Producers is also seeking to diversify its offerings, introducing wheat with 12.5% protein content to Indonesia. Trial deliveries were reportedly well received, and discussions during a recent trade mission to Jakarta—led by Union CEO Ksenia Bolomatova—focused on expanding cooperation and increasing export volumes.
Indonesia, one of the world’s largest wheat importers, purchased 12.5 million tonnes of grain in the 2024/25 season and is forecast to raise that to 14 million tonnes next year amid rising consumption.
Source: Global Trade Tracker
Russia has already supplied more than 2 million tonnes of wheat to Indonesia over the past two years, solidifying its position among the country’s top suppliers.
IMO Delays Net Zero Shipping Framework
The International Maritime Organization (IMO) has postponed the adoption of its Net-Zero Framework (NZF) by a year, creating uncertainty over the global shipping industry’s decarbonization timeline. The framework aims to reduce emissions through a system of Surplus Units (SUs) for compliant vessels and Remedial Units (RUs) for non-compliant ones, combined with a Net-Zero Fund to support clean shipping initiatives.
Research by Rystad Energy highlights structural gaps in the NZF, including a projected mismatch between clean-fuel availability and demand, as well as a shortage of Tier II offset units. These imbalances could push trading prices for compliance units close to the Tier II penalty ceiling, limiting financial incentives for early adoption of zero-emission technologies.
Rystad’s analysis estimates that total annual penalty payments under the SU trading system could escalate sharply over the coming decades—rising from around USD 17.3 billion in 2030 to nearly USD 78.7 billion by 2050, underscoring the growing financial risk for non-compliant vessels as emission targets tighten.
Source: Rystad Energy
The analysis also notes infrastructure constraints, technology readiness, and global energy system interconnections as key barriers. While the framework is intended to drive emission reductions, these practical challenges may slow progress and complicate implementation, especially in the early years.
In Other News:
- EU Considers Ban on Ethanol-Based Products: The EU is considering restricting or phasing out ethanol-based products, including fuel additives, industrial solvents and personal care items, following the European Chemicals Agency’s assessment that long-term ethanol exposure may pose cancer risks, partly due to by-products like acetaldehyde and formaldehyde.
This has raised concerns among ethanol producers, particularly in India, where a potential ban could disrupt exports and challenge progress toward the country’s E20 fuel-blending target. Experts note, however, that routine use of ethanol remains safe, viable alternatives are available, and ethanol-blended fuels continue to reduce certain harmful emissions—suggesting that demand is likely to persist even amid tighter regulatory scrutiny.
- Bluetongue spreading across dairy farms around Europe: Poland has reported a bluetongue outbreak in a cow near the Czech border. The virus affects cattle, sheep, and goats but poses no risk to humans or the safety of milk and meat products. Local authorities are monitoring the situation to prevent further spread.
In the UK, a new case has been confirmed in Shropshire. The disease, transmitted by midges, can affect livestock health and productivity. Authorities have implemented control measures, including testing and movement restrictions, to limit its spread and protect surrounding farms.
