China halts purchases of new-crop US soybeans
China has yet to book a single shipment of new-crop soybeans from the US for the 2025/26 season, marking the slowest start in at least 20 years.
Chinese purchases of US soybeans have been zero in recent months, a situation linked to high tariffs, tariff uncertainty, and the availability of alternatives from Brazil. While purchases are typically low during this period, they are not usually nonexistent. The last time US farmers waited this long for new-season soybean bookings was in 1999. Source: Bloomberg Finance LP
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- Brazil offers political stability and competitive prices, despite a stronger Real
Brazil holds a significant cost advantage in soybean production, with per-hectare production costs approximately 20% lower than in the US, primarily due to lower land and capital expenses.
While the correlation between the Brazilian Real and soybean prices has been significant, current soybean prices are low despite the Real's strength (a stronger Real should reduce the competitiveness of Brazilian exports). Since Trump's first trade war, China has largely shifted its focus to Brazilian soybeans, although it remains a crucial buyer of US soybeans. For China, US imports account for just 20% of its total soybean imports, but for the US, China represents around 50% of its soybean exports. Source: xStation5
- Political trade considerations
Even though Brazilian soybean prices are currently higher than US prices, China continues to primarily purchase soybeans from South America for political reasons. The current tariffs on US soybeans stand at 10%, similar to other products. On the other hand, China might be waiting for a potential extension of the suspension of previously extreme tariffs, which at one point exceeded 100% on both sides.
- Record soybean reserves in China
China currently holds approximately 34% of global soybean stocks, estimated at 43 million tonnes by the end of 2025. Record imports in the first half of the year led to a build-up of soymeal reserves, forcing some processing plants to shut down due to a lack of storage space.
China has the largest soybean reserves in the world, surpassing Brazil, the world's largest producer. Source: USDA
Can China quadruple its US imports?
Donald Trump's proposal for China to quadruple its soybean purchases is practically impossible for several reasons:
- Scale of demand
In 2024, China imported around 105 million tonnes of soybeans, with only 22.13 million tonnes from the US (a 21% share). A fourfold increase would mean importing 88.5 million tonnes from the US alone, which would require redirecting the majority of its purchases from Brazil.
- US supply constraints
According to USDA forecasts, total US soybean production for the 2025/26 season is projected at 4.3 billion bushels (around 118 million tonnes), with exports at 1.75 billion bushels (47.6 million tonnes). It is physically impossible to supply China with 88.5 million tonnes given this level of production.
The latest WASDE report showed a projected decrease in US production and significantly lower ending stocks. This, however, comes amid lower export forecasts, and earlier intraday declines were neutralized. Source: Bloomberg Finance LP
- Alternative supply sources
Brazil has sufficient capacity to completely replace US supplies. Together with Argentina, Uruguay, and Paraguay, the South American countries can fully meet Chinese demand. China has been investing in South American ports for several years to increase its purchases of food, including soybeans, from the region.
Impact on soybean prices
Soybean prices initially reacted with a rise following Donald Trump's comments, but we saw declines at the beginning of the following day. However, after 6:00 PM CET, these losses were neutralized by the release of the WASDE report, which showed significantly lower US ending stocks and production. The key factor for prices will, of course, be China's purchasing decisions. If these purchases increase, prices could permanently return above $10. On the other hand, speculators are not particularly optimistic about prices, having significantly reduced their positioning on this commodity.
Soybean prices have returned above $10 following the release of the latest WASDE report. Source: xStation5
The latest global WASDE report indicates a decline in every key metric. The production outlook and ending stocks have been lowered, with ending stocks ultimately set to be minimally reduced from last season's historical highs. While prices may fluctuate at the moment, the global oversupply outlook could drive prices down to the crucial support level of $8.50 per bushel. Before reaching that level, however, prices would have to contend with the important support at $9.50, a level that has been a support since August of last year.
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