China's Fall Grain Harvest Stuck in the Mud

Grain harvesting equipment can't get into muddy fields and the corn crop is at risk of mold due to heavy rains across much of northern China. This is also China's main winter wheat region, so delays in planting in flooded and waterlogged fields could impact next year's wheat crop. While corn prices in China have been under downward pressure and imports of corn and wheat have been minimal over the past year, this weather event could tighten up China's grain markets.

On October 9, the agriculture ministry and meteorological administration issued a warning for October 10-12 of continuous rain and waterlogging of farmland across parts of Northern and Northwest China and parts of the Huanghuai region. An "orange alert" was issued for Xianyang, Tongchuan, and Weinan in Shaanxi Province; Linfen, Yuncheng, Changzhi and Jincheng in Shanxi Province; Xingtai and Handan in Hebei Province; and Dezhou and Binzhou in Shandong Province.

Soil moisture October 9. Blue indicates excessive moisture.

The rainy weather notice advised farmers in high-risk areas to promptly harvest crops and exhorted them to dry grain and use ventilation to prevent germination and molding of grain post-harvest, promptly drain waterlogged fields and prepare land for autumn sowing of over-wintering wheat crops. 

Rainy weather during the fall harvest season is rare in these regions where most rain is concentrated during summer months. Many of these regions suffered from drought during last winter and spring, but a record wheat crop was nevertheless reported during the summer months.

Minister of Agriculture Han Jun inspected difficulties harvesting corn and preparing to plant the winter wheat crop in Henan Province on October 8-9. Minister Han commended upgrades to harvesting equipment in Zhoukou City to enable machinery to access fields by substituting larger wheels and using 4-wheel drive and tractor crawler equipment. Han also stressed the need to deploy grain drying equipment to farms and storage facilities to prevent soggy grain from molding. Han exhorted local officials to improve drainage ditches and to improve agricultural disaster prevention, mitigation, and relief capabilities utilizing "comprehensive grain service centers." 

Minister Han discusses tractors that can navigate muddy fields in Henan Province.
The rain apparently stopped for this photo, and no one has mud on their shoes.

Han stressed the need to plan for winter wheat planting, to increase the supply of seeds and fertilizers and to guide farmers on avoid impacts of excess soil moisture on wheat plants and late-sowing of wheat to ensure that winter wheat planted area remains stable. 

Minister Han's remarks raised concern over grain markets by emphasizing the importance of grain price stability, ensuring reasonable net returns for grain farmers, and coordination of grain procurement and insurance claims. 

State media in Hebei Province reported using 186,000 crawler-type harvesters since conventional equipment cannot access fields. These tractors can harvest over 100 mu per day--about 16 acres. 

The State Administration of Food and Commodity Reserves also issued a notice on October 9 demanding that grain purchasing and storage officials in provinces hit by rains prioritize grain procurement, coordinate deployment of grain drying equipment to farmers, ensure grain is stored in waterproof facilities, monitor risks of mold and toxins in grain, and the step up coordination of policy and market procurement and state and local procurement, and carry out targeted procurement and disposal of substandard grain. 

The notice advised officials to prepare to implement the minimum price procurement policy for rice, probably an indicator that rice prices are near the minimum level and also to avoid mixing substandard rice in State reserves. 

A wheat expert interviewed by Farmers Daily acknowledged the delay of corn harvesting and winter wheat planting, then emphasized that rains will replenish moisture in soil and aquifers, improving growing conditions for next year's wheat crop. He pointed out that extensive flooding in Henan Province during 2021 was followed by a big wheat harvest the following year.

13% of Wheat Purchased at Support Price

China purchased 13 million metric tons of wheat through its minimum procurement price program this year, according to the director of the State Administration of Food and Commodity Reserves. Purchases were made in provinces of Henan, Anhui, Hebei, and Shandong. 

The director also announced that a total of 100.16 million metric tons of wheat has been procured during the peak marketing season. Thus, 13% of this year's crop was purchased at the minimum price and stored in government reserves.

The director said wheat procurement began early this year and proceeded smoothly as most farmers sought to sell their grain as soon as it was harvested. The minimum price program gave farmers a "bottom line" that guaranteed that farmers could sell their wheat at a good price, the director said.

The minimum price for wheat this year is RMB 2,380 per metric ton for grade 3 wheat. The Chinese support price works out to US$ 9 per bushel at the current exchange rate. By comparison, the futures price for U.S. wheat is currently about $5.07 per bushel.

The simple average of procurement prices paid for all wheat reported weekly by the Administration of Food and Commodity Reserves from May to September was RMB 2,410 per metric ton.

China reported producing 138.16 million metric tons of wheat this year, so 9.4% of all wheat produced in 2025 was purchased at the minimum price. (The minimum price program only operates in 5 provinces representing about 82% of wheat output.)

The value of the wheat purchased at minimum price is RMB 30.94 billion ($4.3 billion at the current exchange rate). 

A calculation with simple assumptions shows that the value of wheat purchased at minimum price was 8.5% of the value of wheat produced in China this year. 

China Could be Facing a Farm Crisis

U.S. news media are reporting that China's soybean boycott is driving American farmers into financial trouble, but China could have a farm crisis of its own brewing. Chinese authorities quietly pared back imports of corn and wheat last year to insulate its farmers from worldwide downward pressure on farm prices. But the country's flood of imported Brazilian soybeans this year pressures prices of Chinese soybeans, with knock-on effects on prices of other crops.

Several years ago Chinese authorities fretted about low profits undermining grain production incentives. Since then, farm prices have fallen further and the country's new cadre of scaled-up farms have a bloated cost structure. Now Chinese authorities have stopped publicly talking about the problem, likely an indicator that the problem has become even more acute. 

As China's fall harvest gets underway crop prices are low and under a new round of downward pressure. The average price for corn--China's largest crop--reported Sept 23 by China's Food and Commodity Reserves Administration was RMB 2,235 per metric ton, close to last year's price, but down 20% from September 2023. Chinese corn prices have fallen after harvest during October-December during the last two years and could do so again as new crops come on the market. During September there was a slight downward trend that signals another seasonal decline as the harvest gains momentum. 

Data from China National Administration of Grain and Commodity Reserves.

Prospects for price declines on the horizon are evident from corn futures. The November 2025 corn futures contract on China's Dalian Commodity Exchange peaked in the first week of September at RMB 2231 per metric ton and dropped about 4 percent to RMB 2143 by the end of September. That's below the September contract that closed out at RMB 2,285 last month. These prices suggest lower corn prices are indeed expected over the next two months

Chart shows daily high, low and closing prices on the Dalian Commodity Exchange.

A corn market analysis by China's Feed Information Net this week reported a 2.57% decline in the cash price during September as new corn came on the market and accumulated at northeastern ports for shipment to the south, traders began selling inventories of old grain more freely, and poor profitability constrains feed mill purchases. A major uncertainty is impact of wet weather across northern China that hindered drying down of corn and resulted in mold in some areas. 

China's soybean producers are also facing lower prices than last year. While Chinese corn prices rebounded in H1 2025, there was not much of a rebound in soybean prices. The late September farm price for China's soybeans was down about 11.4% from a year ago and down 23% from two years ago. There was a slight downward trend during September, also suggesting further declines as the harvest progresses this fall.

Data from China National Administration of Grain and Commodity Reserves.

The November No. 1 soybean contract on the Dalian exchange peaked on September 8 at RMB 3,977 and was down about 1.3% by the end of the month. The November soybean futures price is about 3.4% below where the September price ended up, suggesting more declines are expected. 

Chart shows daily high, low and closing prices on the Dalian Commodity Exchange.

Chinese rice prices, both indica (long grain) and japonica (medium grain), also show signs of decline heading into fall harvest. It looks likely that authorities will activate minimum price purchase programs for rice as prices approach the support price level of RMB 2580 for indica and RMB 2620 for japonica. Rice prices saw sharp declines in October last year that contrasted with the unusual October-November increases during 2023.

Data from China National Administration of Grain and Commodity Reserves.

Data from China National Administration of Grain and Commodity Reserves.

China's official cost of production survey in 2023 (the most recent data) showed Chinese corn and single-season rice producers making profits, wheat producers close to breakeven, and producers of soybeans, rapeseed, and double-cropped rice losing money. The decline in crop prices since then (evident in the charts above) likely eroded profitability for Chinese farmers. Lack of profits is often cited obliquely in government discussions as a challenge for maintaining national food security. Shrinking profitability likely contributed urgency to the agriculture ministry's campaign to raise crop yields based on the idea that higher yields will reduce per-ton production costs and improve profitability for farmers. 

The official cost survey understates the cost structure for "new type" scaled-up farm operators who replace unpaid family labor with higher cash expenses for machinery and fuel, buy expensive high-yielding seeds, and pay cash rent for their land. While the cost survey includes land rental of about RMB 200 to 400 per mu, a China Agriculture University article reported rents ranging from RMB 400 to 800 per mu in various regions for grain crops (land used for vegetables and bananas brings higher rents). 

Since the elimination of agricultural taxes 20 yeas ago, China's small-scale farmers have paid nothing for the land allocated to them by their village collective if they cultivate it themselves. Now authorities are pushing schemes to consolidate and transfer village land to scaled-up farms that include payouts to villagers to keep them happy after giving up their land. These payouts become a cash expense for the farming operations that take over the land.

The rapid expansion of scaled-up farmers who pay villagers for their farmland means that land rents are undermining the economic viability of grain production in China. The 2022 China Agriculture University article cited above observed that land rent accounted for half of grain production costs for scaled-up farms. That 2022 article noted that land rents raised the cost of wheat above the price of imported wheat, and its authors warned that a 10% drop in grain prices would wipe out profits for scaled-up grain farmers. Unprofitable grain ignited panic in authorities about the diversion of land away from grain production, prompting them to hire teams of rural thugs to force farmers to plant grain crops, knock down buildings and uproot fruit trees to maximize land area planted in grains. 

Since 2023 the teams of rural thugs have quietly disappeared, but Chinese wheat, corn and soybean prices have dropped by 20%, while rice prices have dropped 5%-to-10%. The scaling-up of farms and encouragement to adopt expensive machines and "smart-farming" equipment continues. A 2024 21st Century Business Herald article reported rapid growth in farmland transfers by various methods and estimated that about half of China's cropland was leased to large-scale farmers last year. 

Discussion of the role of land rents in China's grain production has disappeared from news media and academia during the last 3 years. The absence of discussion in state-controlled media is probably an indicator that it is a worrying problem that authorities want to cover up. 

China's establishment of a commodity pipeline with Brazil appears quite successful by facilitating China's trade war boycott of U.S. commodities. However, the China-Brazil hookup may prove to be more fragile than expected if Chinese authorities panic over low crop prices and notice that relentless expansion of output and exports from South America boosts world supplies and puts downward pressure on prices. In particular, China's quest to boost domestic soybean production--cited by the ag ministry as a major achievement during the 14th 5-year plan--looks doomed as Chinese soybean prices drop faster than any other crop price, further eroding production incentives.

Former Ag Minister gets Suspended Death Sentence

Tang Renjian, China's Minister of Agriculture from 2020 to 2024, was given a death sentence with a 2-year reprieve for taking bribes totaling RMB 284 million, according to China's central news organization. Like most things in China, this is probably not what it appears to be. 

Former Agriculture Minister Tang Renjian in court.

The Changchun Intermediate People's Court of Jilin Province found former Party Secretary of the Ministry of Agriculture and Rural Affairs (MARA) Tang Renjian guilty of taking bribes during his tenure at various posts from 2007 to 2024. Tang was accused of using his power and status to assist units and individuals in business operations, project contracts, and job adjustments. Earlier this year, Radio Free Asia reported that Tang was accused of accepting gifts and property for help in business deals, favoring relatives, making "blind decisions" in poverty alleviation programs, and interfering in judicial decisions. It sounds like Tang acted like any other communist official in China.

He was deprived of political rights for life, and all his personal property was confiscated and turned over to the state treasury. 

Tang had been removed from his post as agriculture minister and investigated in May 2024. The investigation was completed in April 205 and the Supreme Peoples Procuratorate referred the case to Changchun for prosecution.

A number of aspects of this case seem puzzling. 

Why was the trial held in Changchun? None of Tang's postings were anywhere near Jilin Province. Is it common to prosecute individuals in regions unrelated to the crimes? 

His death sentence was delayed (effectively suspended) because Tang confessed his crimes, revealed additional facts previously unknown to authorities when he was arrested, and expressed his guilt in court. Yet the description of Tang's trial says that he and his attorney cross-examined witnesses, implying that Tang contested his guilt. 

Tang doesn't fit the profile of corrupt bureaucrat. Tang appears to have been a policy wonk with a doctorate in agricultural economics, and his jobs in research institutes and the Central Leading Groups on Finance and Poverty Alleviation do not look like prime bribe-generating opportunities. His posting as Guangxi party secretary lasted 2 years, his posting as deputy party secretary and governor of Gansu Province lasted 3 years, and he was MARA minister less than 4 years, seemingly not long enough to establish a power base to generate bribes. How did he manage to get bribes while moving from post to post and different provinces. Guangxi and Gansu are relatively poor provinces and MARA probably has one of the smallest budgets of any ministry in China. 

Tang's RMB 268 million (about USD 38 million) in bribes was described as "extremely large," but this is not that much for a Chinese minister, member of the central committee and member of the National Peoples Congress to have taken over 17 years. If bribery is their concern, authorities could have found much bigger perps in banks and ministries that oversee real estate and industry. 

The bribery charges are most likely a sham, covering up political intrigue or some other "crime". Various theories about Tang's arrest have been put forth, but none appear to be convincing at this point.

Tang Renjian was sent to meet U.S. agriculture Secretary Tom Vilsack in an
attempt to mend ties several months before his arrest.

Raising Grain Yields by Replacing Small-Scale Farmers

China's Agriculture Ministry is campaigning to bring farmers up to speed on the latest seeds and techniques so they can achieve higher crop yields. The details suggest that a core part of the plan is to accelerate the consolidation of farms into larger mechanized operations to replace fragmented plots cultivated by aging villagers using outdated techniques.

A Ministry of Agriculture and Rural Affairs (MARA) video conference on September 25 explained that Xi Jinping has decreed that raising grain yields across broad areas of farmland will be central to boosting grain production capacity in "the new situation." All agricultural departments and communist party organizations were therefore instructed to elevate yield-improvement over broad areas as a key priority. 

A Chinese State Council press conference on September 16 announced that 702 counties were chosen this year to implement a broad-area yield improvement plan (粮油作物大面积单产提升行动). The objective is to disseminate seeds, techniques and equipment that facilitate high yields achieved in experimental plots to the broader population of farmers. The goal is to attain yields over a broad area of fields that are closer to yields achieved in experimental plots. 

A January State media article about the campaign presented yields from experimental plots and actual farm yields for rice, wheat, and corn to quantify the task. The data imply that the corn yield on experimental plots exceeds the yield obtained by Chinese farmers by 3225 KG per hectare, while the gap for rice farmers' yields is 1875 KG, and the gap for wheat farmers is only 525 KG. 

2023 data from Xinhua News Service, January 30, 2025. Converted from original data in KG per mu.

Official data on Chinese farmers' grain yields indicates they have been growing on a linear trend. If average corn yields, for example, continue on their historical growth trend of 80 KG/hectare per year, it would take about 40 years to reach the yield on experimental plots. For reference, USDA projects 2025 corn yields of 6660 KG for China, a record-high 11,720 KG for the United States (amid much controversy), 7270 KG for Ukraine, 6910 KG for the EU, and 5800 KG for Brazil. A linear trend for U.S. yields indicates they are growing 114 KG/ha/year, faster than growth in China's yield.

Average national yields reported by China National Bureau of Statistics.

The September 25 video conference emphasized prioritization of subsidies for agricultural machinery such as high-performance seeding equipment, tillage and land preparation machines, drones for spraying chemicals, and efficient grain combine harvesters that minimize loss of grains. It also called for subsidizing grain storage facilities in the north to reduce losses from storing grain in outdoor courtyards, ventilated and waterproof grain storage facilities in south China, and grain drying equipment (to prevent post-harvest molding). 

A video training meeting held by Shandong Province officials last week instructed all localities to "secure the final victory" by minimizing waste in procurement and marketing of this year's fall crops and by following instructions for planting the winter wheat crop by precise spacing of seeds and use of pest and disease control measures to ensure a bumper harvest next year. 

A regional rice yield improvement meeting held by MARA during April cited several key initiatives: centralized production of rice seeds, "reasonable" increases in planting density, application of side-dressing fertilizer to rice plants, a spray that combines growth promoting agents with pesticides and herbicides, and efforts to convince farmers to plant two crops of rice per year. 

A May activity held in a town of Zhejiang Province featured demonstration of a 6-row rice transplanting machine supplied by an agricultural machinery company in Guizhou Province as part of the rice yield improvement campaign.

State media are highlighting a parallel initiative to set up networks of "comprehensive agricultural service centers" that are expected to disseminate seeds, farm equipment and technical advice. However, descriptions of these service centers emphasize their role in consolidating farms under the control of large-scale companies and cooperatives and the promotion of mechanization. A common theme of the articles on agricultural service centers is the need to consolidate farmland into larger operations to prevent idling of land as small holders migrate and age. 

An agricultural service center in Inner Mongolia featured in State media this year offers corn seeds and specialized equipment as part of a project to promote dense corn planting to raise yields begun in 2020. Its description in State media featured an "Agricultural Production Management Contract Signing Ceremony" in April where 30 families from Fuxing village turned over 300 mu (20 hectares) of land to be farmed by a company this year. The communist party secretary organized the transfer of all of the village's farmland to an agricultural trust company that conducts all farming operations. He said families were willing to turn over their land because they didn't earn that much from farming it themselves in recent years. The center's "company + village collective + household" model and its agricultural machinery cooperative service also seems to reflect land consolidation and large scale farming as a priority. This agricultural service center hopes to establish branches in every town and village in the county. 

Villagers sign over farmland at an agricultural service center in Inner Mongolia.

A 2022 Farmers Daily description of an agricultural service center in Sichuan Province also highlighted its role in mechanizing farming and bringing abandoned land back into production as outmigration shrinks the number of farmers. It described a model that links up local supply and marketing cooperatives (a quasi-governmental system established to supply inputs and market products during the planned economy era), village collective organizations, farmer cooperatives, and rural banks. The article cited the cooperative's trusteeship farming services for bringing idle land back into production. One farmer claimed he earns 1,000 yuan per mu after paying a company to farm his land on his behalf. 

An IT company that operates agricultural service centers in Jiangsu Province promising to promote high-tech farming describes what sounds quite similar to China's established top-down bureaucratic system. The provincial center receives timely information on policy and market dynamics and issues "strategic guidance" for county level agricultural development.  The municipal level service center plays a coordinating role in allocating resources and matching up suppliers with customers. The county service center allocates land, labor and machinery to implement local farming projects. The service center is supposed to allow farmers to choose suppliers of seed, fertilizer, pesticides, machinery services, and technical advice through an internet platform. 

The centers are operated by a varying group of subsidized commercial and bureaucratic actors. An announcement by Guangdong Province invites applications to operate agricultural service centers at the county, town and village levels. Applicants can expect to receive subsidies for 50% of the cost of agricultural machinery. They can receive funding for storage sheds, labor for integrated pest management, promotion of products, technical advisors, training for repair of machinery, and promotion of financial services. Applicants for county or town agricultural service centers can be agricultural companies, cooperatives, or other new types of farming operations. Village-level centers can be operated by village collective organizations. 

All information on yield improvement comes from State media which proclaims great success, but a few cracks in the facade show up.

Several problems were acknowledged at this year's regional rice yield improvement meeting: inaccurate design, inadequate implementation, lax supervision, and failure to distribute funds in a timely manner. 

Several years ago officials in the supply and marketing cooperatives--one of the organizations operating agricultural service centers--were investigated for widespread corruption. Corruption continued into this year in at least one supply and marketing cooperative in Guangdong Province. An investigation of Guizhou Province's supply and marketing cooperatives reported an unhealthy trend in corruption and mismanagement. A similar videoconference held by Fujian Province's agriculture department also called for rectifying corruption and mismanagement in its agricultural system. 

China's subsidies for promoting new crop varieties and agricultural machinery have a long history of corruption and abuse. The subsidies for improved crop varieties were abandoned 10 years ago. A network of township agricultural land exchanges started up about 15 years ago seem to have quietly disappeared. 

Officials Scrap Hog Subsidies, Revive Environmental Controls to Cut Capacity

Chinese authorities met with 25 major hog companies on September 16 in an ongoing effort to eliminate excess capacity that is driving down hog prices. Companies and provincial officials were ordered to reduce productive sow herds by 1 million head by the end of January 2026. Companies were ordered to reduce their hog slaughter by 10 percent during 2026, cut back "secondary fattening" and keep slaughter weights at no more than 120 kg. Central and local officials were ordered to stop subsidies and bankers were ordered to stop giving loans for hog farm expansions. Provincial officials are under pressure to tighten up on enforcement of environmental regulations, a campaign that could shut down large numbers of non-compliant farms. 

The agriculture ministry's livestock and veterinary bureau and the National Development and Reform Commission's price bureau gathered representatives from 25 major hog-producing companies at the September 16 meeting in Beijing. This was the latest in a series of documents and meetings since April that called on the industry to pare back production capacity to halt a long slide in hog prices. 

• An April 28 "Implementation Plan for Conserving Grain in the Livestock Industry" called for controlling the "master switch" of sow inventories, guiding farms on appropriate timing of slaughter and optimizing herd size.
• A late May meeting called for zero increase in sow numbers, holding slaughter weight at 120 kg, and refusing to sell hogs for "secondary fattening." 
• At a July 23 forum on "high-quality hog industry development" the minister of agriculture called for strict control of production capacity, rational culling of sows, cuts in sow inventories, a pledge to stop selling hogs for secondary fattening, controlling slaughter weights, and pausing additions to production capacity.
  

The September 16 meeting went beyond the earlier orders by issuing specific targets and dates to companies, setting sow herd targets for provincial governments, and including subsidies, bank credit and environmental regulation in the scope of measures to curb production capacity. 

By calling for a halt to central and local government subsidies for hog production and farm construction Chinese authorities tacitly acknowledged that their own subsidies created the excess capacity they are trying to pare back. This year's list of swine subsidies includes payments-per-sow of up to 1000 yuan per head, subsidized insurance for sows and finishing hogs, funds for building barns, manure collection and biogas facilities, earmarked loans, streamlined environmental approvals for new farms, artificial insemination and breeding animal subsidies. Guizhou Province gave sows subsidies to 116 companies and cooperatives that had between 98 and over 16,000 sows. In Yinchuan, Gansu Province, there is a subsidy of 100 yuan per head for each hog slaughtered. In Jianping County of Liaoning Province, semen from improved breeds was subsidized for 13,338 farmers with between 1 and over 600 sows. The September 19 order to pare back subsidies appears to be a reversal of a generous subsidy campaign launched almost exactly 6 years ago by Vice Premier Hu Chunhua to alleviate a serious pork shortage during an African swine fever epidemic.

The September meeting's recognition that subsidies contribute to excess pork capacity in China is ironic in view of the antidumping of imported European pork--released 11 days before the September 15 meeting--that faulted subsidized imported pork for driving down prices in 2021. Last year when the investigation was launched this blog highlighted the role of subsidies in expanding Chinese pork production and driving down prices.  The antidumping investigation observed huge growth in production, sales, market share and employment during the 2020-23 investigation period for the Chinese hog companies it surveyed, yet it found "harm" from imported pork causing prices to go down. In fact, during 2020-21 bringing down prices for consumers was a priority, and the Chinese Government's pork reserve company was actually one of the primary importers of pork during 2019-21. Nearly all pork auctioned to alleviate shortages during those years was identified as imported.

Another commentary on the September 16 meeting pointed to a revival of strict environmental enforcement as a factor that was estimated to squeeze out 12% to 16% of sows by 2027. According to this article, provincial officials have been ordered to strictly investigate livestock and poultry pollution control with surprise inspection programs as a "political task." Shandong's Jinan municipality found problems in 16 of 41 farms they checked, and Guangxi's Bobai County found problems in 335 of 17,622 farms. An emphasis on ensuring farms separate rainwater from sewage and prevent overflow during the monsoon season suggests this environmental crackdown may have been spurred by recent flooding and complaints of sewage-tainted tap water in some communities this summer. 

The new environmental program is an echo of an earlier push to reduce or eliminate livestock farms in areas prone to pollution. That program closed hundreds of thousands of farms before vanishing during the 2019 pork shortage. It now appears to have been resurrected. The new effort targets the same Yangtze and Pearl River water source protection regions that were targeted a decade ago in a plan to shift hog production into central and western regions. It also targets farms with old equipment within 500 meters of residential areas and bodies of water that were previously targeted. The commentary warns that millions of sows could be eliminated by shutting down non-compliant farms. 

China's rejections of pork and poultry imports spike--sparked by trade friction?

China's border inspectors have been discovering a lot more problems with imported pork and poultry. There were few rejections of either type of meat until 2024 when rejections of imported pork spiked during July and October. Rejections of poultry soared during 2025. Rejections of both pork and poultry peaked at their highest ever levels of 2,000 metric tons in June 2025. 

Jan 2022-July 2025. Compiled from reports on China customs website.

China had never rejected more than a couple of hundred metric tons of pork in a month until July 2024, when inspectors turned away 1,000 metric tons. Rejections of pork rebounded to nearly 900 metric tons in October and remained at a high level in the first 7 months of 2025. China's pork rejections peaked at record-high 2,000 metric tons monthly in June and July 2025.  

Jan 2024-July 2025. Compiled from reports on China Customs website.

The increase in imported pork problems just happened to begin in July 2024, the month after China announced an anti-dumping investigation of pork from the European Union. Nearly all the pork rejected since then was supplied by companies in the two primary EU exporting countries Spain and Denmark, also the two main targets of antidumping duties announced this month. Denmark accounted for most pork rejections during 2024 and early 2025; Spain accounted for nearly all of the spike in rejections during June-July 2025. In 2025 a modest volume of Irish, Dutch, Portuguese, and Austrian pork shipments have been rejected. The U.S. was a distant third in rejections--coming primarily from Smithfield Foods. Shipments from the UK, Russia, Brazil and Canada were rejected in 2025.

(Pork from Germany, a leading EU producer, has been banned by China since September 2020 when the first outbreaks of African swine fever occurred in Germany.)

Chinese customs officials cited two main reasons for rejecting pork shipments: unspecified "animal disease" and testosterone. They rejected about 2,000 metric tons of pork for animal disease in both 2024 and 2025--most of it from Danish Crown suppliers. Some pork supplied by Smithfield and Spanish suppliers was also cited for disease. Testosterone rejections jumped from about 455 metric tons in 2024 (the first time it had been cited by Chinese customs) to 5,448 metric tons in 2025. The testosterone rejections were cited mainly for pork supplied by a number of Spanish companies, but shipments from several other European and UK companies were also cited.

China's surge in rejections of imported poultry during 2025 consisted mainly of U.S. products--mostly chicken paws. Monthly rejections of poultry had never exceeded 270 metric tons until February 2025 when they jumped to 672 metric tons. Rejections grew exponentially to a peak of 2,000 metric tons in June. Rejections fell to 1,415 metric tons in July--still the second-largest amount ever rejected. Rejections during January-February 2025 came mainly from Brazil and Belarus. Growth in rejections of U.S. poultry appears to coincide with rising trade tensions and imposition of tariffs that began in March-April. Rejections of U.S. poultry grew from 400 metric tons in March to 1,766 metric tons in June as the U.S. and China traded tariffs, gave reprieves and failed to progress in negotiations. Another 1,185 metric tons of U.S. poultry was rejected in July. 

Compiled from China Customs Administration web site. January-July 2025.

All the major U.S. poultry companies--plus a number of less prominent ones--had poultry rejected by China in 2025. Detection of furacilin, an antibacterial agent, was the reason most often cited by Chinese inspectors for rejecting U.S. poultry. Other reasons cited included failure of sensory inspection, lack of documentation, and labeling.

There are no clues to indicate why Chinese inspectors have been suddenly detecting so many problems with U.S. poultry and Spanish/Danish pork. The timing of the rejections is suggestive of China's use of stringent inspections as another tool of retaliation. Oddly, there no rejections of either type of meat during January-April 2024.

The United States has also had the most beef rejected during 2025, but the volume is much smaller compared with pork and poultry. The U.S. has had 730 metric tons of beef rejected over the first 7 months of 2025, ahead of Brazil's 203 metric tons, Denmark's 54 metric tons, and Argentina's 37 metric tons (includes inedible cattle products).

There is little doubt that China uses selective inspections of imports as a nontariff barrier and retaliatory tool, but its use is selective and impossible to prove.

During the 2018 trade war there were several instances of U.S. and Canadian pork rejections/bans reported in news media, but no surge in rejections was evident in the reports posted on the customs web site. (Reported rejections were at their lowest level ever during 2018 following a spike in rejections during a 2017 campaign to address safety of imported food and a reorganization of import regulation in 2018). 

Cost of China's Brazilian Soybean Imports is Rising

 Brazil's soybean exports to China began to slow in August, with 7.9 million metric tons shipped, according to Brazilian export data. That's a slower pace than the 10-to-11 mmt monthly exports during March to July 2025. (But it exceeds the 5.9 mmt exported to China a year ago in August 2024.) As Brazil's huge--but finite--supply of soybeans shrinks, it will become increasingly expensive for Chinese importers to maintain their embargo on U.S. soybeans.

Brazilian exports from UN Comtrade

This year, arrivals of Brazilian soybeans clearing customs in China seem to have lagged Brazilian exports by 1 or 2 months. For example, China's first spike in arrivals of Brazilian beans this year was in May (12.1 mmt), two months after Brazilian shipments surged in March (11.1 mmt). The August 2025 drop-off in shipments shown in Brazilian exports may show up in China's October import data. 

China customs data. Detailed data for August have not yet been released.

As Brazilian bean supplies pass their peak and Chinese buyers have to bid against Brazilian customers, soybean prices are rising in Brazil. Since May the average value of Brazilian soybean exports has been rising roughly in parallel with spot prices in Brazil. However, the modest jump in value of August shipments was behind the jump in Brazilian spot prices that month. According to Chinese customs data, importers in China began to see a small impact on the cost of imported Brazilian beans during July-August, about two months after Brazilian export values began rising in May-June. Chinese import data for September-October will likely show additional increases in cost that reflect the rising value of Brazilian exports.

Brazilian and Chinese customs data and Brazil CEPEA.

China's Brazil Soy Buys Enabled by 3-year Slide in Prices

China's frenzy to snatch up record volumes of Brazilian soybeans has had surprisingly little impact on the cost of its soybean imports. The record volume of soybeans arriving in China during May-August 2025 had the lowest per-ton cost since pre-pandemic years. As the southern hemisphere export campaign has passed its peak, competition for Brazilian beans is finally heating up. But China's importers have not yet felt impact of rising Brazilian prices. 

In historical context, China's record pace of soybean imports during May-August 2025 stands out clearly, with a total of 50 mmt arriving over those 4 months combined. Most came from Brazil. China now imports from Brazil nearly year-round, but there is still a seasonal pattern. According to Brazilian sources, Brazil's August soybean exports totaled 9.33 mmt--many of which will end up in China this month. That was record-high for August, but down 23.8% from July, suggesting that China's imports of Brazilian beans have passed their seasonal peak. 

Calendar years through Aug 2025. Unit value = ratio of value to volume.
Genetically modified soybeans only. 
Calculated from China customs data.

A 3-year slide in soybean prices enabled China's spike in soybean purchases. China's August import total of 12.3 million metric tons of soybeans had an average value of $444 per metric ton, down from $415 in August 2024, $556 in August 2023, and nearly 40% lower than the $723 in August 2022. 

This year's unit value of imported soybeans in China fell slightly as Brazilian soybeans began arriving in April 2025. The average value of imported soybeans fell from $459 per metric ton in March to $438 in May and $435 in June. The average import value then edged up to $444 in August. The August cost was still well below the average a year earlier. The relatively low prices for Chinese buyers this year reflect the huge supplies in Brazil. 

Average value of soybean arrivals is ratio of import value to volume.
Brazil spot price is monthly average of cash price in Paranaguá reported by CEPEA.
Chart shows previous month's Brazilian price.

The decline in cost of Chinese soybean imports is broadly consistent with a decline in cash prices in Paranaguá, Brazil since 2022 (Brazilian prices are lagged 1 month in the chart below to line up with import prices of beans that take a month or so to reach China). Brazilian prices bottomed out at $373 in January 2025 before rising 10.6% to $413 by July.  

Recently Brazil's Center for Advanced Studies in Applied Economics (CEPEA) reported rising price premiums for exported soybeans due to intensified competition between Brazilian and foreign buyers. 

The 2-percent increase in cost of China's soybean imports between June and August only dimly reflects rising spot prices in Brazil. The average Brazilian price rose 4.2% in August to reach $430, and the price is up another 1% in the first week of September.

While Chinese importers have accumulated a reported 6.8 mmt of imported soybean inventories over the last 3 months, many of the beans have been processed into oil and meal, depressing prices of both. If imported beans rise in cost with no rebound in prices of oil or meal, Chinese crushers could face losses.

A Chinese news article last week reported that Brazilian soybean shipments to China had been quoted at premiums of $2.69 per bushel for October shipment and $2.75 for November. Crushing margins for Brazilian soybeans were slightly negative for October and November. According to that report, China's soybean purchases through October were completed but purchases for November to January were still being made. 

Red Hot China Soy Imports Closing Out Crop Year; Grain Imports Stone Cold

 China imported 12.28 million metric tons of soybeans in August 2025. This is the fourth month in a row of record or near-record imports since South American beans began arriving in large quantities in May.  With one month left in the marketing year, China's cumulative total of imports for 2024/25 is 96.5 mmt (about 3 percent more than the same period in 2023/24). It looks likely that China will equal or surpass last year's 105 mmt market year soybean import total. 

Source: China customs data.

China's customs administration has not released August data by trade partner, but it is likely that nearly all of these imports came from South America. With minimal amounts of U.S. soybeans expected to arrive in August or September, China's total imports of U.S. soybeans are likely to hit 24.2 mmt, a market share of about 23 percent. 

Soybean imports are not likely to be sustained at this torrid pace in the upcoming 2025/26 marketing year as the northern hemisphere harvest progresses. As is widely reported, Chinese buyers have not booked any new-crop U.S. soybeans, but estimates are that China will receive 10-to-11 mmt of primarily South American soybeans in September.

In contrast to soybean imports, China has slashed its cereal grain imports this year. August 2025 cereal grain imports were just 1.8 mmt (including wheat, corn, rice, sorghum, barley, and tubers). That was down 36% from 2.84 mmt in August 2024. For October 2024-August 2025 China's cumulative cereal grain imports are 24.9 mmt, down 60% year-over-year (the October-September total lumps in wheat which is on a different market-year from fall-harvested grains).

Cereal grain = China's "grain" category less soybeans.
Calculated from monthly China customs reports.

China's Soybean Deficit Risk is "Manageable" Industry Report Says

The risk of a soybean shortage is "manageable" if U.S.-China trade negotiations remain at an impasse, according to a tour of cooking oil manufacturers in southern China conducted by industry analysts in August. Chinese edible oils processors are watching negotiations and concerned about Brazilian and U.S. soybean supplies, but the report's authors saw little risk of an oilseed market shortfall until March 2026.

Industry analysts associated with MySteel agricultural commodities visited edible oils processing facilities in China's Guangdong and Guangxi Provinces--two important points of entry for oilseeds and edible oil imports--during August 2025. MySteel is one of the more objective providers of agricultural market information in China. The report was directed at futures market investors.

China has become reliant on imported soybeans, rapeseed, rapeseed oil, and palm oil. Guangdong, a key export manufacturing hub, has 14 edible refineries. Guangxi borders Vietnam, and Guangxi's ports of Qingzhou and Fangcheng have been gaining in importance as entry points for oilseeds, feeds and edible oils. Guangxi supplies edible oils by containers to landlocked provinces of southwestern China, including Yunnan and Guizhou, and by liquid bags to Sichuan. 

The Guangxi processors are operating at 65% of capacity and the Guangdong processors are at 62%. Rapeseed processors, however, are operating at just 13% of capacity as imports of Canadian canola seed and oil have been pared back by tariffs. The report said it is difficult to buy canola from Canada and a policy breakthrough is needed to buy Australian rapeseed.

According to the report, demand for fats and oils is currently weak. In May 2025 Xi Jinping ordered government officials to forego alcohol at official meals and to cut back on government-sponsored meals. This austerity measure cut back banqueting at high-end restaurants and crimped restaurant profits through loss of high-margin liquor sales. The report said high-end restaurants are shifting to take-out, mid-range restaurants are in decline, and business is rising for street vendors. Flagging restaurant business reduces demand for cooking oil. The report said consumers are purchasing cooking oil in smaller bottles than usual. 

(The report did not address the street vendor issue, but demand for oils may be curtailed by street vendors' tendency to use low-quality oils and recycled "gutter oil.")

The survey of 8 processors in Guangxi found that their soybean inventories stood at 596,000 metric tons in August, up 178,000 mt from the same period last year. Soybean meal inventory was 90,000 mt, up 15,000 mt from a year ago. Commercial soybean oil inventories were estimated at 92,500 mt in Guangxi and 218,000 mt in Guangdong, but they did not report year-over-year changes. The large inventories may reflect seasonal low consumption during summer months and processing of large volumes of soybeans that arrived from Brazil since May. The opening of schools and two major holidays in September-October could see stronger consumption. 

Soybean oil is the cheapest oil in China now and its use in blended oils is therefore rising. Rapeseed oil supplies are limited by high tariffs on imports of Canadian canola oil and canola seed. Indonesian and Malaysia biofuel policies have boosted the price of palm oil. According to the report, the proportion of palm oil in blended oil has dropped from 50% to just 2%. Rapeseed oil is the most expensive, so it is also being eliminated from blended oil. The report noted that demand for rapeseed oil is limited outside regions where it is favored for its strong taste (along the Yangtze River and in northwestern provinces). In Guangdong Province peanut oil--one of China's most expensive oils--is preferred.

Demand for soybean meal has been growing due to its cost-efficiency. Its inclusion in pig feed, for example, has reportedly grown from 12% to 15%. Rapeseed meal is used mainly in fish feed, and the low price of soybean meal vs. rapeseed meal has prompted more use of soybean meal. The peak season for fish farming is from July to October, so demand for rapeseed meal will tail off as cold weather sets in. The report said there has not yet been any impact from the government's order to limit hog weights to no more than 120 kg.

Edible oil processors are currently purchasing mainly Brazilian soybeans. The report estimated that 12.1 million metric tons of soybeans were imported to China in August (10.7 mmt from Brazil, 1.4 mmt from Argentina, 0 from the U.S.). September arrivals were estimated at 10.5 mmt, October 9 mmt, and 7.5 mmt in November. Taking into account imports of soybean meal, the report's authors pronounced the supply risk as "manageable." They did see risk of a soybean supply shortfall in March 2026.

According to the report, if trade tensions with the United States ease, U.S. soybeans may gain commercial value due to their superior quality and competitive price (after adding a 10% tariff the landed price of U.S. soybeans is only 100 yuan higher than Brazilian soybeans). 

Record Soy Oil Exports Reveal China's Excess Soybean Supplies

China has flipped from net importer of soybean oil to net exporter for the first time ever, a phenomenon discovered by an analysis posted on a Chinese edible oils industry site earlier this month. Booming exports and plummeting imports of soy oil indicate the pace of soybean imports from Brazil is overwhelming demand in China and driving down prices of soy oil and meal. At the same time, accumulation of inventories and weak demand in China's food industry will help China sustain its strategy of zeroing out imports of U.S. soybeans to gain the upper hand in trade negotiations.

Chinese customs data through July 2025 confirm a prominent uptick in soybean oil exports mirrored by plummeting imports. The chart below shows soybean oil import and export volumes for the first 10 months of the 2024/25 market year compared to year-earlier volumes. (The market year runs from October through September.)

With just 2 months left in the 2024/25 market year, China's exports of soybean oil stand at 234,000 metric tons and its imports at 127,000 metric tons so far in 2024/25. This year's soybean oil imports are less than half the volume imported during the year-earlier period, and exports are up 170 percent. 

China's market year is October-September; data are available through July 2025.
Chart shows October-to-July imports and exports for MY 2023/24 and 2024/25.
Data from China customs administration.

An examination of USDA's PS&D database indicates that China's soybean oil exports are at a record high, and this is the first time China has ever been a net exporter of soybean oil. USDA estimates that China's imports and exports will each be 250,000 mt for 2024/25. Chinese customs data suggest the export number will hit that estimate for the full market year, but the import number is likely to fall short. Thus, China is likely to end up a net exporter for the full 2024/25 market year.

China has dozens of export markets for its soybean oil, but the largest increases in exports went to South Korea (up 30,300 mt), Hong Kong (up 29,000 mt), Malaysia (up 23,560 mt), and North Korea (up 16,670 mt).

The emergence of China as a net exporter of oil is mostly symbolic of market conditions in China. The export volumes are inconsequential. USDA estimates that China's consumption of soybean oil will hit 20 million metric tons in 2024/25, by far the largest in the world (By comparison, U.S. consumption is estimated at 12.178 mmt). Essentially all of China's soy oil production is derived from crushing imported soybeans to produce oil and soybean meal. 

The rise in soy oil exports suggests that the amount of oil produced from imported soybeans exceeds China's demand, resulting in low domestic prices that are competitive on the world market. Closure of many restaurants and workplace cafeterias and slow demand from food processors crimps demand for imported oil. The CASDE supply and demand report issued by China's agriculture ministry this month shows that domestic ex-factory prices of soybean oil in China is about 12 percent below the price of imported soybean oil during 2024/25; that margin was about 2 percent in 2023/24. 

A survey of China's Guangdong and Guangxi Provinces reported that inventories of Chinese soybean oil are also up. Downstream consumption was judged to be weak but could rebound when the school year starts. Inventories of soybean meal are also ample, with some processors running out of room.The report estimated that ample inventories and weak demand could help China get through the fourth quarter on Brazilian soybean supplies, but a significant shortage could occur by January.

Trade War Stimulates New Chinese "Land Grabs"

As trade tensions with the U.S. flare up, Chinese companies are setting up giant farms in Africa, Asia and Russia according to Chinese news media. The news echoes an earlier wave of so-called "land grabs" that were over-hyped and mostly ineffectual.

Earlier this month, a Beijing Times Caijing article, "Why are Chinese companies flocking overseas to farm?" explained that the phenomenon reflects China's strategic considerations for ensuring food security and its far-reaching intention to reconstruct international trade. The article connects the farming investments to trade frictions between the U.S. and China, the use of agricultural products as a bargaining chip in "geopolitical games," and the "huge risk" of relying on the U.S. and Brazil for 90% of its soybean imports.

An edible oils news site proclaimed that "a new wave of 'going global' in the agricultural and food sector has begun," with more and more companies investing in agriculture and food and participate in global food resource allocation."

A Chinese farm in Zambia in 2019. Source: Economic Observer.

Both articles featured a 100,000-hectare corn and soybean farming project in Angola with $250 million of investment planned by CITIC Construction after signing a memorandum of understanding with the Angolan Ministry of Agriculture and Forestry. CITIC will have a "secure stable supply" through long-term land lease agreements. The company pledged to establish a full agricultural value chain, including seed R&D, technology promotion, processing facilities and a logistics system. 

Angola's minister of agriculture and forestry said about 60% of soybeans and other ag products from the CITIC project will be exported to China. The rest will be consumed in Angola. According to the description, the project will help diversify China's overseas food sources and reduce Angola's dependence on food imports. 

During the same month, China Hydropower signed an agreement to obtain 30,000 hectares in eastern Angola with a 25-year tax concession to build logistics infrastructure and a seed research and testing center. This project is intended to attract other Chinese agricultural companies.

Business Times also pointed to Chaoliang Group's development of a 32,000 hectare project to grow soybeans in Tanzania.

Both articles also cited Wanlin Group's June 2025 agreement with Uzbekistan's agriculture minister to build a 10,000-hectare farming base that will produce vegetables and soybeans and process dehydrated and frozen vegetables in an Uzbekistan industrial park. 

These articles echo an earlier round of sensational announcements of giant overseas farming projects in the aftermath of the 2006-07 global food price spike. Business Times touted the superiority of the "Chinese model" over "Western" investments in Africa--citing application of modern technology, drip irrigation to conserve water, and inclusion of processing industry--but these sound a lot like an earlier generation of announcements that never were executed.

Back in 2010, the same edible oils news site reporting the new Angolan project trumpeted news that Chongqing Grain Group was buying 53,000 hectares of land to grow soybeans in Brazil with plans to reclaim an additional 67,000 hectares of uncultivated land and expand in Argentina. Another company, Zhejiang Fudi, gave Chongqing Grain Group 16,800 hectares of Brazilian land it had acquired in 2008. Chongqing Grain Group's chairman explained that the project was part of the company's plan to secure food supplies for the city of Chongqing, to go public, and to expand globally. The project never materialized and years later the land was still idle. By 2024, an article reviewing Chongqing Grain Group's escape from the brink of financial collapse observed that all its projects in Brazil and Argentina had failed, contributing to financial losses and heavy debt.

In 2011, Heilongjiang Beidahuang Nongken Co. announced it was negotiating an agreement with the Argentina Province of Rio Negro to cultivate 300,000 hectares of uncultivated land to grow grain, soybeans, vegetables and wine. The project was expected to include a hydro power plant and port logistics. This project languished after local opposition emerged based on environmental concerns. 

The latest round of projects may also be fake or doomed. The Chinese companies named in the articles are engaged in construction, dam-building, and textile manufacturing, and none appear to have experience in farming. Business Times hinted that CITIC Group is already encountering challenges obtaining rights to the land it wants to develop in Angola. Business Times also cited common problems that have undermined past Chinese farming projects such as weak local infrastructure, underdeveloped legal systems and insufficient supplies of skilled local labor. 

Business Times said geopolitical risks are the most prominent uncertainty. It's probably a coincidence that the announcement of the Angolan farming projects came at the same time rioting broke out in Angola in late July. The rioting was triggered by fuel prices but looting focused on Chinese businesses in Luanda's Chinatown. The Angolan riots are a reminder that China's giant farming projects are predominantly in unstable countries, a natural consequence of targeting countries with weak property rights and corrupt officials where it's relatively easy to acquire huge tracts of land. 

There are examples of smaller-scale Chinese farming projects in Africa, but the recent murder of one such farmer illustrates the risk of farming in Africa. On August 2, a 57-year-old Chinese woman operating a chicken and vegetable farm in Zambia was confirmed to have been murdered after having been kidnapped from her home in July. 

U.S.-China Soybean Drama Shaping Up

A U.S-China soybean drama is brewing as the peak season for shipping U.S. soybeans to China is just over the horizon with no sales of U.S. beans to China on the books. Soybeans--one of the top U.S. exports to China--have mostly been in the background of trade negotiations, but they got some publicity this month. President Trump called on China to "quadruple its soybean orders," and the American Soybean Association asked the President to prioritize soybeans in the negotiations to rescue farmers from a "trade and financial precipice."

U.S. soybean shipments to China occur predominantly during the months of October-December, immediately after the harvest. During the 2024/25 marketing year now finishing up, the United States exported about 16 million metric tons of soybeans to China during October-December, more than 70 percent of the year's exports to China and about 30 percent of the estimate of total soybean exports for the 2024/25 marketing year in USDA's latest WASDE report. The October-December exports to China comprise about 13 percent of all U.S. soybean use for the market year, again based on WASDE estimates.

The U.S. market year for soybeans is September-August.
Data from USDA GATS database.

Zero U.S. soybean sales to China have been booked as of late August, which appears to reflect a China-imposed embargo designed to put pressure on the U.S. in trade negotiations. The latest round of trade talks this month resulted in a 90-day extension of the deadline for a U.S.-China trade deal. The way things have been going, no deal is likely to be concluded until the deadline. That would be in November, missing the window for the peak export season. Thus, the U.S. industry could have zero sales to China through November and very possibly through December even if a deal is concluded. 

On the Chinese side, imports of Brazilian soybean imports are booming and Brazilian supplies have been creeping into the peak U.S. shipping season. In China's 2024/25 market year (which begins in October), China's soybean imports from the U.S. peaked during November-January (lagged a month from the peak U.S. export months), with about 12 mmt arriving over those 3 months combined. China imported from Brazil during the peak U.S. season, with 6 mmt of Brazilian beans arriving in October 2024, 4 mmt in November, and 3 mmt in December. After a brief lull in Brazilian soybean arrivals during February-March, imports from Brazil boomed to 10-to-12 mmt monthly during May-July and likely another 9 or 10 mmt monthly in August-September. Imports from other countries (Argentina, Uruguay, Canada, Ukraine, Russia and Ethiopia) combined for about 6 percent of China's soybean imports so far this market year.

The China market year for soybeans is October-September. No data for August-September.
Data from China customs administration. 

China effectively embargoed U.S. soybeans before during the 2018 trade war when China cut off nearly all U.S. soybean imports during September-December that year. Despite a modest boost in exports to other destinations U.S. soybean exports fell about 12.5 mmt in 2018/19. The U.S. soybean industry could see a similar drop in exports in 2025/26 if China repeats this embargo. (This outcome may not be reflected in WASDE's projected exports for 2025/26 since USDA does not account for future policies in its forecasts.)

The events shaping up are not a surprise to anyone in the soybean market. The average farm price for U.S. soybeans reported in WASDE is $10/bu for 2024/25, down from $12.40 in 2023/24. Both countries have been preparing since the 2018 trade war. China's "diversification" of imports has been a growing reliance on Brazilian beans over the past decade. The U.S. likewise pledged to diversify foreign markets for its soybean exports. More recently an initiative to promote use of renewable biodiesel fuel has boosted domestic use of U.S. soybeans. USDA projects domestic crush of U.S. soybeans at 69.1 mmt in 2025/26, up 12.2 mmt from the last trade war in 2018/19, picking up some of the slack left by China's shrinking purchases. However, exports to non-China markets appear to have slacked off since the last trade war. But exports of soybean meal have been on the rise.

Data from USDA PS&D and Global Agricultural Trade System.

Chinese leaders believe soybeans are one of their key points of leverage in the trade negotiations. The American Soybean Association's letter urging President Trump to prioritize soybeans in U.S.-China trade negotiations was featured in the English edition of China's nationalist Global Times and in an article posted on Chinese ag news sites. Chinese propagandists liked the American Soybean Association's warning that U.S. farmers "cannot survive a prolonged trade dispute."

It's unclear how long China can sustain an embargo on imports of U.S. beans. Reuters reported that Chinese buyers had booked 8 mmt of soybeans from South America for September and 4 mmt for October with more purchases due this month. If they repeat last year's purchases of Brazilian beans, an embargo on U.S. soybeans could still leave a 10-to-12 mmt hole in China's soybean supply. 

China may be able to muddle through if they have been stockpiling part of the surge of Brazilian soybeans imported since May. According to China Grain and Oil Market News, weekly crushing volume is 2.3-to-2.4 mmt per week (9-to-10 mmt per month)--a high volume for this time of year, probably reflecting the huge volume of Brazilian beans arriving. Soybean oil consumption is also record-high for this time of year but soy oil inventories have also grown to 1.14 mmt, the highest in 5 years according to Grain and Oil News. At present, the market is hoping for relief from low soy oil prices from a seasonal bump in demand during upcoming fall holidays.

China's soybean market has shown a tendency to gyrate between tight and loose market conditions. China clamped down on U.S. bean imports in March-April this year, resulting in a spike in soybean meal prices that was alleviated in May when Brazilian beans came to the rescue.

China may be short of rapeseed due to this year's announcement of high duties that are choking off imports Canadian canola seed, oil and meal. Chinese rapeseed oil prices are at a premium to soybean oil, likely stimulating demand for soybeans as a substitute for rapeseed/canola. 

China's hogs are the biggest consumers of soybean meal. In contrast to the 2018-19 trade war when an African swine fever epidemic shrank the swine herd by 125 million head, this year's swine herd is so large Chinese officials recently ordered producers to thin their herds and slim down their hogs. Poultry inventories are also at a high level. The low price of soybean meal is boosting its inclusion in feed, undermining a Ministry of Agriculture plan to substitute other protein meals and shift to low-protein diets as a strategy to reduce China's exposure to exactly the kind of crisis that is now looming. 

It's not clear who has the upper hand in the upcoming soybean drama, but it will probably be a sideshow with negotiations focused on EVs, steel, chips and rare earths. In the big picture of a $295.5 billion U.S. trade deficit with China last year, $12 billion of U.S. soybean exports will probably not get a lot of attention from negotiators.