Brazil's DDGS enter China, replacing U.S. DDGS diverted elsewhere

China has opened its market to Brazilian distillers dried grains (DDG), a co-product of distilling fuel ethanol from corn that is a cost-efficient ingredient in animal feed. This will further enhance Brazil's dominance as a supplier of China's agricultural imports. China was once a big market for U.S. DDG, but those sales were diverted to other countries after China hit them with steep duties.

Exports of Brazilian DDGs to China are expected to grow at a rapid pace. Brazil's corn-based ethanol production has been growing rapidly, and the Brazilian industry has been eager to gain access to China's market for its DDG coproducts. According to S&P Global Brazil's industry has been working hard to gain access to China's market. A Brazilian official told S&P Global, "[W]e continue to push forward with a major goal: opening up the Chinese market, ensuring even more sustainability for this sector."

An estimate circulated in news media forecasts that Brazilian ethanol production capacity will double by 2033, and DDG exports to China could reach 7 million metric tons. 

A decade ago in 2015 the United States exported over 6.5 million metric tons of DDGs to China valued at $2 billion. A year later China launched an antidumping investigation of U.S. DDGs that resulted in prohibitively high antidumping and countervailing duties (AD/CVD) that shut most U.S. DDGs out of the market. Most of those sales have now been diverted to other countries.

After losing access to China, the U.S. industry was surprisingly successful in expanding DDG sales to other markets. Overall U.S. DDG export sales peaked at 12.7 million metric tons in 2015, more than half going to China. In 2024 the U.S. exported 12.2 million metric tons of DDG, of which only 331,400 metric tons went to China. 

Between 2015 and 2024 growth in U.S. DDG exports to 50 other countries replaced most of the lost sales to China. Exports to Mexico and South Korea each grew by 850,000 metric tons or more, and sales to Indonesia, Turkey, and Colombia each grew by more than 500,000 metric tons after the U.S. lost access to China. Other countries with gains of 100,000 metric tons or more included Vietnam, Japan, Ireland, New Zealand, Canada, the Philippines, and Bangladesh. 

AD/CVD = antidumping and countervailing duties.
Export data from USDA Global Agricultural Trade System.

China was never easy going for U.S. DDG exporters. A 2024 World Trade Review account of China's DDG and sorghum antidumping cases by eyewitness Bryan Lohmar noted that Chinese authorities launched an antidumping investigation of U.S. DDG in 2011, the year after China became the top overseas market for U.S. DDGs. That investigation that was eventually dropped, but DDGs were caught up in China's rejection of a corn GMO variety in 2014.  

After U.S. DDG sales reached $2 billion in 2015, China launched a second AD/CVD investigation that was the nail in the coffin. This case was China's payback for a pair of WTO cases against Chinese grain policies and U.S. denial of "market economy" status for China that year. This time, no Chinese feed companies dared to come forward to testify against the AD/CVD investigation, and China set prohibitive tariffs on DDG from dozens of U.S. ethanol plants. In 2023 China made a point of extending the duties for another 5 years.

U.S. and Brazilian DDGs have both been mostly shut out of China in recent years, so they compete head-to-head in other foreign markets like South Korea. A U.S. industry official told S&P Global that opening China to Brazilian DDGs might actually be good for U.S. sales by scaling back competition in other markets after Brazilian DDGs start going into China. 

Might Chinese authorities also hit Brazilian DDGs with AD/CVD duties? Not likely. But the logic used by China's legal authorities to conclude that U.S. DDGs were dumped in China at unfairly low prices should apply to Brazilian DDGs if their sales to China grow as fast as expected.

Brazilian exports are expected to grow as fast as U.S. exports did during 2009-15. The heated U.S.-Brazil competition in South Korea and other countries reported by S&P Global suggests that Brazilian DDG prices are equal to or lower than prices of U.S. product, which Chinese authorities deemed to be unfairly low. U.S. DDGs are currently quoted at $234 per metric ton FOB. DDGs produced by Chinese ethanol plants are currently about RMB 2,350-to-2,380 ($326-to-$331) per metric ton. 

If Brazilian prices are at or below U.S. prices (with no AD/CVD duty) they are likely to undercut prices of Chinese DDG suppliers, possibly posing a new dilemma for Chinese regulators.

China agrees to import Brazilian DDGS and peanut meal

China has agreed to open its market to Brazilian distillers grains and peanut meal with a sanitary and phytosanitary protocol between China's General Administration of Customs and Brazil's Ministry of Agriculture and Livestock announced today. Distillers grains produced from Brazilian corn and meal produced from Brazilian peanuts that meet requirements specified in the agreement can be imported to China as of the date of the announcement. 

Both products are used as ingredients in livestock feed. 

Distillers grains are co-products of corn ethanol production, including distillers dried grains (DDG) and distillers dried grain with solubles (DDGS). Brazil produced an estimated 4.2 million metric tons of distillers grains in 2024. China was the largest export market for U.S. DDGS with 6.5 million metric tons exported in 2015. Exports were redirected to other markets after China assessed antidumping and countervailing duties on U.S. DDGS in 2016. In 2024 the United States exported 12.5 million metric tons of DDGS of which only 3% went to China. Brazil has begun producing corn-based ethanol in recent years.

Peanut meal is the residual product after extracting oil from peanuts. China is the world's largest producer and consumer of peanut meal, estimated by USDA at 3.9 million metric tons for 2024/25. Brazil produces only 125,000 metric tons of peanut meal.

Exporters still need to be approved and registered with China's customs administration before products can be shipped. The protocol specifies specific harmful organisms not permitted in shipments to China and requires use of management practices to control contamination. 

Has drought impacted China's wheat crop? Will we ever know?

Reports of serious drought and pictures of parched fields have circulated on China's internet over the past two months. While Chinese officials acknowledge drought impacts, they insist the wheat crop now being harvested will be normal. We'll have to wait for market prices and imports to reveal whether drought has meaningful impact on China's supply of wheat--the main crop harvested during the summer months.

An April article on Chinese social media observed that many reports of serious drought bubbling up around the country conflicted with the agriculture ministry's pronouncement that a "strong foundation had been laid" for a bumper harvest of summer-harvested crops. At the same time, that article also observed that posts by online influencers in China may not be credible either since they have incentive to exaggerate drought problems to attract attention. Whom to believe? Will China resume large imports of wheat after cutting imports sharply last year? 

In early May the Chinese communist party's Liaowang (Outlook) news weekly's "Beware of Continuing Drought in Grain Producing Area" warned that low rainfall since last fall that had stunted the growth of wheat plants across the country. Liaowang's reporter said that interviews conducted in Provinces of Jiangsu, Guangxi, Shaanxi, Henan, Hubei had revealed worsening drought conditions, infestations of pests and plant disease, and drinking water shortages affecting hundreds of thousands of people. 

During the same week Shanghai-based news outlet The Paper described government activities in Jiangsu Province to mitigate drought resulting from 5 months of below-normal rainfall. The central Ministries of Finance and Agriculture allocated disaster prevention funds for 6 Provinces of Shanxi, Jiangsu, Anhui, Henan, Guangxi, and Shaanxi to irrigate crops and to spray growth-promoting chemicals, herbicides, fungicides and pesticides on the fields. 

Xinjing Bao, another communist party outlet, reported in mid-May that rains had eased drought conditions in the southern part of Henan Province, but drought continued in western and northern parts of the Province. Agricultural officials promised funds for irrigation, but farmers in some parts of the province had given up and started harvesting their wheat about a month early. A China Agricultural University Professor declined to make a pronouncement on whether Henan's wheat output will decline this year.

An article posted May 20 reported a Shaanxi Province farmer's assessment that he expected a wheat yield 90-perent less than normal and complained that his corn seeds had not germinated. 

China's weather service showed many areas with seriously low soil moisture on April 15. Rains eased drought in many areas by May 28, but it might have been too late to overcome impacts of the dry conditions during the key growing period for wheat kernel formation.

Soil moisture April 15	Soil moisture May 28

A May 28 article in State media claimed China had created 562 million tons of artificial rainfall to mitigate drought that has persisted across many parts of China since the beginning of this year and continues to impact farmers now.

Each official news media article dutifully reports plans to address drought conditions. However, irrigation is not possible in hilly areas and places where rivers have dried up. Liaowang reported that the water level was dangerously low in the Dujiangkou Reservoir that feeds the central route of China's massive south-to-north water transfer system. Water levels were measured at 2-meters below normal at 3 monitoring stations on the Yangtze River that supplies the water diversion project. 

On May 20 an official in charge of grain reserves decreed that the summer grain situation is "overall normal" and the quality of the crop is "relatively good overall" despite lower-than-normal rainfall this year. The National Administration of Food and Commodity Reserves predicts that 85 million metric tons of wheat will be procured from the harvest that is beginning now. That would be up from 75 mmt procured in 2024, which was up from 68 mmt in 2023. On the same day a weather report in Farmers Daily advised wheat growers in western and northern Henan, southern Shanxi and Shaanxi Provinces to use "micro spray" irrigation to improve wheat yields.

As the winter wheat harvest kicks off this month China's wheat market is overshadowed by depressed prices that reflect weakness in China's overall economy. Chinese authorities seem more concerned that the low level of grain prices this year could stir up rural unrest. News articles ahead of the wheat harvest have assured farmers that warehouses have plenty of money to buy the summer's grain crops and plenty of space to store them.

Back in April--before the drought became a major concern--China's Grain and Oils News described China's market for wheat as "loose," characterized by "relatively low" prices. They cited weak demand for flour, minimal use of wheat in animal feed, and an increase in wheat reserves released by local and central authorities as they sold off old stocks ahead of the harvest. With tensions over U.S. tariffs bubbling up in April some Chinese traders and farmers were holding on to stocks of wheat with speculative motives, but the trade war was not expected to have much impact on China's wheat market since it is not reliant on imports of U.S. wheat. 

Raw material price data reported by China's National Bureau of Statistics show wheat prices a year ago in May 2024 were close to RMB 2,600 per metric ton, then dropped below 2,450 after last year's harvest in June, and reached a low point below RMB 2,360 in January and February of 2025. Since April wheat prices have rebounded slightly to RMB 2,434 in mid-May 2025, but are still below year-earlier prices. For reference, China's corn price also crashed after last fall's corn harvest, but the rebound in corn prices since January has been stronger than the wheat market's microscopic rebound.

Data from China National Bureau of Statistics raw material prices paid by enterprises.

The price of flour--the main product of wheat--has shown a similar declining pattern over the past year. Flour prices reported by the food reserve administration have been flat since mid-April despite trade war and drought news. The flour price is now about 10 percent below year-earlier prices.

Data from China's Food and Commodity Reserve Administration wholesale prices.

An analyst might look at futures prices to discern market participants' expectations, but wheat futures contracts listed on China's Zhengzhou Commodity Exchange have zero trading volume over the past year.

Over the past year China has cut back its wheat imports from all countries, presumably to limit supply and goose Chinese wheat prices upward. During the 2023/24 market year China had imported 13.155 million metric tons of wheat. During the first 10 months of the 2024/25 market year China has imported 2.8 million metric tons. Imports were rock-bottom during October 2024 to March 2025, then bounced to 740,000 metric tons in April. If the drought has no impact on the market and imports revert to low levels in May and June, China's 2024/25 market year imports could come in at about 3 million metric tons--about 10 million metric tons less than the previous year. But if supplies are tight again, and imports continue at the April pace during May and June, its 2024/25 import total could reach 4.3 million metric tons. Either number would be a big drop from China's 2023/24 import total of 13.155 million metric tons. For reference, USDA forecasts 3.3 million metric tons of Chinese wheat imports for 2024/25.

Monthly imports during July-June international wheat marketing years.
Data from China Customs Administration web site.

China's wheat imports respond to market conditions with a long lag that makes it hard to correlate imports with crop conditions, so it could be many months or years--if ever--before we can discern the state of China's 2025 wheat crop. 

In an earlier example, China's statisticians proclaimed a record wheat harvest of 13.77 million metric tons for the 2022/23 market year. Leading up to that crop the agriculture minister had raised alarm about the unusually poor state of wheat seedlings, zero-covid lockdowns had impeded access to wheat fields during the spring, and some wheat fields were cut for animal feed or burned due to the crop's poor quality. Despite statistics showing a record crop during 2022 Chinese wheat prices spiked to record levels that year and China's wheat imports soared to over 13 million metric tons. That was the largest amount of wheat imported since 1991/92, and it made China the world's top wheat importer that year. China's price spike during 2022 might have been attributed to the spike in global prices that year due to the Ukraine invasion and closure of Black Sea shipping (even though China does not import Ukrainian wheat), but the surge in Chinese wheat imports when global wheat prices went up only makes sense if China's wheat supply was worse than authorities let on. 

So, it's possible that impact of drought on China's wheat crop could be undetected until we see what happens to prices and imports later in 2025. By that time other things will have happened that will obscure the link between crop conditions and market supply and demand. 

China soybean and grain imports down in April

Customs data show that China's April 2025 soybean imports were 6.08 million metric tons (mmt), down 29 percent from a year ago and the lowest April volume in years. This follows a March import volume of just 3.5 million metric tons. The low volumes reflect stringent customs inspections that slowed unloading of vessels already at Chinese ports. 

China customs administration data

The year-on-year decline in soybean imports occurred for both U.S. and Brazilian soybeans. Brazil typically becomes the dominant supplier in April. Customs data showed 4.6 mmt of Brazilian soybean imports and 1.38 mmt of U.S. soybean imports during April 2025. With the shift to Brazilian soybeans inspections have sped up this month and soybean crushers have ramped up operations. Soybean meal prices have dropped from near RMB 4000 in late April to just above RMB 3000 this week. Some feed mills are cutting feed prices due to the reduced cost of soybean meal. Soybean imports are expected to rebound to 12-to-13 mmt in coming months.

China's imports of cereal grains during April were under 2.3 mmt. This total was down 59 percent from a year earlier (a less precipitous decline than in the first 3 months of 2025). 

China's April imports of corn were down sharply from a year ago, as they have been each month in 2025. April corn imports were 183,000 metric tons, down from 1.18 mmt last April. With corn imports cut to the bone, China's corn prices have climbed about 13 percent so far in 2025. Brazil supplied 81 percent of China's April corn imports. Russia supplied 6.8 percent, Ukraine supplied 5.5 percent, and the U.S. and Myanmar each supplied about 3 percent of corn imports.

China customs administration data.

China's wheat imports rebounded in April but are also well behind last year's import volume. April wheat imports were 740,000 metric tons, down from 1.93 mmt a year earlier. The winter wheat harvest is about to begin. Severe drought conditions appear likely to reduce the wheat harvest, but wheat prices have only shown a tepid rise. Wheat imports came mainly from Canada (385,000 metric tons) and Australia (347,000 metric tons). Small amounts of wheat came from Kazakhstan and Russia.

China customs administration data.

Sorghum imports were just under 200,000 metric tons in April, down from 808,000 metric tons a year earlier. Sorghum imports have been down from year-earlier volumes in each month so far in 2025.

China customs administration data.

China cut back sharply on imports of U.S. sorghum in April and boosted imports from Australia and Argentina.

Barley imports were down from last year, but by a smaller margin than other grains. April barley imports were 1.15 mmt, down 1.61 mmt a year earlier. April barley imports came from Australia (820,700 metric tons) and Argentina (206,000 metric tons), Canada (64,000 metric tons), Kazakhstan (35,475 metric tons), Russia (20,000 metric tons), and Denmark (2,583 metric tons).

China customs administration data.

China's imports of rice have been negligible so far in 2025.

Evaluating China's agricultural import diversification

For decades Chinese leaders have been clamoring to "diversify" imports of agricultural products to reduce reliance on the United States. Having experienced the trade war with China 7 years ago, U.S. commodity producers have also declared their eagerness to diversify their export markets. Both diversifications are tough going because Brazil is the only real alternative supplier with capacity to supply China's gargantuan import needs. Likewise, alternative markets are not large enough to absorb the volume of U.S. soybeans sold to China. 

China has been importing enormous quantities of Brazilian soybeans. In calendar year 2024 China boosted its imports of Brazilian soybeans to nearly 75 mmt--over 70% of the total. China imported only 22 million metric tons (mmt) of soybeans from the U.S. last year, but it's hard to see how those beans could be replaced. No other country shows signs of sustained growth as a soybean supplier to China. Imports from Argentina have been up and down. Imports from Uruguay hit 2 mmt in 2024 for the first time. Imports from Russia during 2023 and 2024 jumped to over 1.2 mmt after a Russia-China grain trade deal was signed in 2023, still a long way from replacing U.S. supplies. China is trying to nurture soybean suppliers in Africa, but their supplies are small and inconsistent.

The other side of the equation is the reliance of U.S. soybean producers on sales to China. Indeed, more than half of U.S. soybean exports go to China. The volume of U.S. soybean exports to China stopped growing years ago. U.S. sales dropped dramatically during the first trade war in 2018 when China essentially banned U.S. exports during the peak shipping months. An increase in U.S. soybean sales to alternative markets offset part of the decline that year, but overall exports were down about 9 mmt in 2018. Sales to China rebounded to 34 mmt in 2020 and tailed off to 26-to-30 mmt during 2021-2024. (You may notice that export volumes reported by U.S. data exceed the amount China says it imports from the U.S.)

U.S. export data from USDA Global Agricultural Trade System.

The U.S. sells soybeans to more than 90 countries, but prospects for replacing sales to China are bleak. Sales to Mexico, the EU, other East Asian countries and Egypt have been in decline since 2020 as the U.S. also faces stiff competition from Brazil in some of these markets.

China and the U.S. are less intertwined in corn trade. In 2024 China had 3 chief suppliers of corn imports. China acted in 2012 to dilute its reliance on U.S. as a corn supplier by opening its market to Ukrainian corn and beginning negotiations with Brazil. Ukraine was the top supplier of China's imported corn in 2020. China's imports from Ukraine dropped off slightly in 2022-24 following Russia's invasion of Ukraine. Meanwhile, imports from the U.S. surged in 2021 and 2022. Then, details of a China-Brazil corn import protocol were finally worked out and Brazil suddenly became China's top corn supplier in 2023 and 2024. Imports from other countries like Myanmar, Bulgaria, and Laos have been relatively small and inconsistent from year to year. Despite the 2023 grain trade deal with Russia, China's imports of Russian corn are underwhelming. Starting in mid-2024 China dialed back corn imports from all sources to insulate its farmers from declining corn prices. Corn imports remained unusually low during the first months of 2025.

The United States never relied much on China as a corn export market until a surge in sales made China the top foreign market for U.S. corn during 2021-22. That surge was an anomaly attributed to a perfect storm of factors: China's Phase One commitment to buy U.S. products, a 40-percent increase in Chinese corn prices during 2020-21, China's rebuilding of corn stocks following a disgorgement of excess reserves completed in 2019, and a massive rebuilding of its swine herd after a 2018-19 African swine fever epidemic. In historical context the drop in U.S. corn sales to China during 2022-2024 looks like a return to business as usual. U.S. exports of corn to Mexico, Japan, and Colombia boomed in 2024 as sales to China declined.

U.S. export data from USDA Global Agricultural Trade System.

These are just two of the many commodities traded between the U.S. and China. Despite China's bluster about diversifying its import sources, Brazil is the only other country with the resources and productivity to meet China's enormous needs for farm commodities. Brazil is also a top supplier of China's beef, poultry, sugar, and cotton. China's "diversification" actually entails creation of a huge dependence on Brazil.

The U.S. is likewise intent on diversifying its agricultural export markets, but that is also tough going. China has been the main growth pole in global ag commodity demand over the past two decades. While the U.S. has dozens of other overseas markets, there is no single market that can rival China in soybean sales. In corn sales, China has never been a reliable customer and may never be. 

China Bluster on Decoupling from U.S. in Agricultural Trade

China says it is prepared to decouple from the U.S. in agricultural trade as it "diversifies" its trading partners, but this “opportunity” comes with some “risks.”

On April 23, a bombastic Chinese news article cited purchases of 40 cargoes of Brazilian soybeans to prove that “Americans Need to Know: Chinese People are Really Not Afraid of Decoupling from the United States.” The article asserted that the United States would be harmed more than China by decoupling and insisted that American farmers are “desperate” and “the public is panicking.”

On April 13 "Chinese Soybeans Take the Lead in Decoupling and Supply Chain Reconstruction Under Trade Friction" announced that China is ready for "complete decoupling." This article also boasted that China is expanding domestic soybean production and claimed that Brazil is a "safer and more friendly partner" with cheaper soybeans that purportedly have a higher oil and protein content and fewer impurities. However, the author acknowledged that Brazilian soybeans cannot fully replace American soybeans due to the seasonal supply availability from northern and southern hemispheres, "stable" quality of American soybeans, and shorter shipping time from the U.S. The article asserted that China needs to break the "monopoly" of American capital by supplying seeds, fertilizers and shipping services in the soybean supply chain. The article also cited a need to develop a local currency settlement mechanism since China-Brazil transactions still need to be settled in dollars.

On April 15, China's Farmers Daily published "Build a safe stable global agricultural supply chain," authored by a researcher from the Agriculture Ministry's economic research institute. Farmers Daily began by quoting Xi Jinping’s proclamation that “security and stability” are the basis for a “new development pattern” and regurgitating Xi’s declaration of “major changes in the world unseen in a century” and Xi’s pronouncement that “the industrial and supply chain must not break down at critical moments.” This article acknowledged that China has 2 or 3 suppliers for imports of corn (93% comes from U.S., Brazil and Ukraine), soybeans (97% from Brazil, U.S. and Argentina), and wheat (81% from Australia and Canada), but claims that it is still too risky to have just a few suppliers. Noting Brazil’s dominance as a source of soybean imports, the author pointed out the Brazil is subject to extreme weather and climate risk. 

The Farmers Daily author urged China to further diversify import sources by forging closer ties with agricultural exporting countries. He called for leveraging the Belt and Road Initiative and promoting Chinese foreign investment in the Black Sea region, South America, and Eastern Europe (no mention of North America) to “break the monopoly of international grain traders.” This includes nurturing Chinese conglomerates in grain trading, processing, trading and agricultural technology to develop global industry clusters and penetrate the high-value links of the value chain.

China views itself as a first mover in new technologies that will magically solve agricultural problems. The Farmers Daily author touted China’s e-commerce platforms as a base for improving digital trade in agricultural goods. Artificial intelligence will improve demand forecasting, inventory management, and logistics optimization. The author predicted that Chinese companies will introduce and apply new agricultural productivity tools such as AI, drones, and robots to reshape global agricultural value chains.

A May 8 article, “China-Brazil Agricultural Cooperation Warms Up,” announced the resumption of imports from 5 banned Brazilian suppliers and gushed over this week’s visit of Brazilian President Lula Da Silva for the Community of Latin America and Caribbean States (CELAC) meeting in Beijing. In a poke at the U.S., the article described the Brazilian president’s visit as a sign of "his sincerity in trade" and featured a comment from Brazil's Agriculture Minister that Brazil is a trustworthy long-term trade partner and can fill the market gap left by the withdrawal during the U.S.-China trade war. The article echoed the talking point of deepening government cooperation in agricultural research by emphasizing the Brazil’s Agriculture Minister and the head of its agricultural research institute will be included in the delegation.

China's industry faces supply and price pressure from the growth in South American farm commodity imports. Last week, Futures Daily’s review of 2024 financial reports concluded that most companies inthe Chinese fats and oils industry are under growing financial pressure from fluctuations in raw materials prices, fierce market competition and pressure to control costs. The article displayed a table showing steep decreases in prices for major vegetable oils over the past 3 years. Futures Daily commented that the Chinese vegetable oil market is facing pressure from declining demand, escalating global trade disputes, and expectations of a recession. A company’s procurement director cited the Brazilian soybean harvest, smaller-than-expected cuts in Southeast Asian palm oil production, growing supplies of vegetable oils and rising inventories for driving down prices in the industry.

China’s beef industry has also been under pressure from falling prices coinciding with rapid growth in beef imports from South America. During 2024 China tripled its rejections of imported meat, including beef from South America. Last December, China launched a special safeguard investigation of beef imports (still ongoing) that attracted attention from Brazilian, Argentine, and Uruguayan officials. In March China suspended two Argentine and three Brazilian suppliers of beef. In a post last month, this blog noted the large volume of Ecuadorian shrimp rejected by China since 2020.

Boston University’s Global Policy Development Center’s discussion of this week’s CELAC meeting in Beijing noted possible discussion of the beef special safeguard tariffs and efforts by Ecuador, Peru, and Argentina to gain market access in China for various fruits, beans, lentils, pork, beef, and dairy products. The Boston University article anticipates dicussion of currency initiatives and noted concerns about a regression of South America’s economy into a supplier of primary commodities as a result of growing trade with China.

April soybean imports less than expected; China cozying up with Brazil

China's April soybean imports totaled 6.08 million metric tons (mmt), according to customs data. While this volume was 2.5 mmt higher than the previous month, Chinese market participants had been expecting 8.5 million metric tons after large purchases from Brazil according to analysis by China's Soybean meal forum. This was the lowest April import volume in the last 10 years.

Customs clearance of soybeans has been slowed by border inspections. It is estimated that 2.4 mmt of soybeans arriving at Chinese ports are still stuck in customs clearance. With tight supplies of soybeans many processing plants are idle. Trucks are reportedly lined up waiting for soybean meal supplies they can deliver to feed mills. 

Earlier this week Chinese authorities announced they had lifted bans on soybean shipments from 5 Brazilian suppliers: ADM, Cargill, TerraRoxa, OlamBrasil, and C. Vale. These exporters had been suspended early this year due to "sanitary issues" involving pesticide residues and pests. According to the article Brazil quickly rectified the situation and the ban was lifted on April 25.

The announcement of the lifting of the ban came in advance of Brazilian President Lula's expected visit to China for the CELAC (Community of Latin American and Caribbean States) Forum to be held in Beijing May 12-13. Brazil's Agriculture Minister and the head of Brazil's agricultural research institute (Embrapa) are expected to accompany President Lula as China and Brazil form stronger ties in agriculture. 

Brazilian officials reportedly are eager for China to make investments in Brazil to address shortcomings in transport and storage capacity that cause serious congestion at ports and roads. Expanded market access and technical barriers to trade are also expected to be discussed at the upcoming Latin American forum in Beijing. 

A Chinese Dream of soybean seeds in Brazil

Brazilian authorities approved a Chinese company's genetically modified soybean seed to be grown in Brazil. Chinese company DBN (Da Bei Nong) described this as a strategy to supply seeds for growing South American soybeans exported to China, thus capturing more value from the supply chain. DBN dreams of making money from seeds, but most of its income comes from selling animal feed and pigs in China.

According to DBN, its genetically modified soybean variety that combines herbicide-tolerant and pest-resistant traits passed a safety evaluation by Brazil's National Biosafety Technical Committee. The two events DBN9004 and DBN8002 were approved for planting in Brazil in 2023 and 2024, respectively. 

DBN said the company now has to gain approval of the variety in "importing countries"--that would include China--before the seeds can be planted commercially in Brazil. China requires that a new round of testing and evaluations be conducted before GMO varieties can be approved for import to China.

DBN explains that the approval of seed for Brazil is part of a "seed export, soybean import" strategy of supplying seeds to grow soybeans in South America for sale to China. DBN notes that the company established subsidiaries in Argentina and Brazil in 2018. The traits just approved by Brazil had been licensed by Argentina in 2023 and by Uruguay in 2025. DBN describes the latest approval as a part of China's "diversification" of imports which has made Brazil the largest supplier of China's soybean imports. 

DBN explains that its seed strategy has been "upgraded" to "export technology, import soybeans" as Chinese companies bring advanced planting techniques, management experience, storage and processing technologies to production regions in South America. The article doesn't mention that herbicide tolerant soybeans developed by multinational companies have been grown in Argentina since the 1990s and for more than 20 years in Brazil. China's soybean yields are inferior to those in South America so it is unclear what technical and management expertise a Chinese company has to offer.

A summary of China's plan for achieving status as an "agricultural power" released last month includes discussion of promoting the Chinese seed industry and protecting Chinese germplasm resources, but no specific mention of operation in the international market. Chinese strategy documents often call for increased involvement of Chinese companies in the supply chain for imported soybeans--in procurement, storage, processing, and trade segments--but this is the first mention of involvement in the seed segment. 

A description of DBN's annual report to investors released on May 7 boasts about the Brazilian and Argentine licensing of its seeds and the "export technology, import bean" strategy as evidence of its innovation and international competitiveness. However, progress toward commercial production of GMO soybeans in China is going slowly. Chinese regulators approved 15 DBN genetically modified corn varieties last year, but only 1 DBN GMO high-oil soybean variety.

DBN began as a seed-breeding company, but it makes most of its money from pig feed and raising pigs in China. In 2024 DBN had animal feed sales of 19 billion yuan and pig sales were 6.28 billion yuan. Seed sales were only 1.4 billion yuan. Feed sales were down 20.68% last year, pig sales were up 10.1%, and seed sales were up 1.4%. The volume of hog feed sold declined 7.6% and volume of fish feed went down more than 20% in 2024. Despite the crash in feed sales DBN claims to have turned a financial loss in 2023 to a modest profit in 2024 through cost-cutting. 

China launches new food counterfeit campaigns

Chinese market regulators have launched crackdowns on adulteration and fraud in cooking oil and meat industries. Chinese authorities have claimed to have solved these food safety and fraud problems on multiple occasions over the past 30 years. 

Fraud and adulteration in China's cooking oil industry will be the focus of a crackdown announced by the State Administration of Market Supervision and Regulation that began April 12 and will continue through December 2025. The rectification will address prominent problems and illegal business behavior that threatens the quality and safety of edible oils, including:

• Adulteration and counterfeiting, including the sale of cheap oils as premium oils and passing off expired oils as new product.
• Excessive use of additives such as flavorings, fragrances, and pigments during the production and processing of vegetable oils.
• False labeling: unlabeled oils or products that inaccurately declare proportions of blended oils, failure to clearly label genetically modified vegetable oils, and false labeling of vegetable oil extraction processes. 
• Failure to fulfill delivery of bulk vegetable oil or failure to carry out responsibilities and obligations in delivery, unloading and loading of oils. 

This illustration instructs consumers how to distinguish pure sesame oil
from sesame oil mixed with cheap rapeseed or cottonseed oil.

The agency said the crackdown will include random inspections and monitoring and collecting tips from consumers submitted through a hotline. There will be factory inspections, checks of raw material, assessment of process controls, and inspections of production and sales records. The agency promises quick and severe punishments, including revocation of licenses, bans, arrests and prosecutions.

Shandong Province announced its own investigation of edible oil and meat. The Shandong campaign sponsored by its market regulation, public security and livestock bureaus and its food and drug administration will focus on high-priced oils such as sesame and peanut oil from now through December. Shandong is one of the top regions for processing soybean and peanut oil.

The Shandong agency is asking for tips from the public on the following edible oil violations:

• diluting premium oils with cheap oils
• adding flavors, spices and pigments to low-end oils to make "fake sesame oil" or "fake peanut oil."
• using "gutter oil" to process vegetable oil
• passing off expired oils as new vegetable oil

Shandong is looking for meat problems that include the sale of sick animals, use of clenbuterol and other banned muscle-building compounds, and production and sale of fake meat.

The new edible oil campaign comes nearly a year after Chinese news media revealed in summer 2024 that trucks delivering petroleum products in northern China were filled with vegetable oils for the backhaul without cleaning the tanks (discussed in this post on news media last year). Chinese news media last year claimed this was an isolated incident, but this crackdown appears to include this problem as well as a much broader scope of fraud.

A number of provincial and local governments have announced crackdowns focused on meat fraud, adulteration, and disease.

Rats allegedly to be used to make fake lamb.

Heilongjiang Province launched a meat industry rectification campaign on April 30 with a longer list of meat problems:

• addition of non-food materials, pesticide residues exceeding tolerances (on meat), and excessive use of food additives.
• processing, storing, or selling meat from animals that died of disease, toxins or unknown causes.
• deceiving consumers by passing off chicken and duck as beef and mutton, passing off other livestock and poultry blood products as duck blood, and using "trough meat" without removing diseased lymph nodes and diseased tissues.
• failure to obtain inspection certificates
• selling cooked food, braised food and other meat products from unknown origins
• processing or selling uninspected meat, meat from unknown origin, or smuggled frozen meat t
• production and sale of fake beef, mutton, donkey and other meat products
• illegal use of nitrites and food additives beyond prescribed limits
• false advertising of meat products on e-commerce or for direct sale.

Gansu Province launched a meat rectification campaign on April 18 that included:

• use of beta agonists, banned medications and other illegal additives and compounds.
• failure of farms to safely dispose of diseased animals; sale of meat from dead animals
• failure of slaughter facilities to check the registration system, acceptance of uninspected animals, pumping water or drugs into animals at slaughter
• unlicensed slaughter of hogs, cattle and sheep
• purchasing meat from animals that died of disease, toxins or unknown causes
• hotpot, barbecue and donkey restaurants purchasing meat from unknown origin or lacking inspection

Gansu also launched a rectification focused on fraudulent food in rural areas that includes unlicensed food production, sale of counterfeit foods, use of rotten or nonfood raw materials, chemical additives, and false claims that foods cure disease, promote weight loss or act as aphrodisiacs. 

Trade War Reverberates in China's Rapeseed Oil Market

A recent study tour of southwest China's rapeseed oil industry shows how developments in global markets filter down to the country's hinterland. The prospect of tariffs on Canadian canola has prompted companies to stockpile canola seeds and oil, while companies are relying on an expected influx of Brazilian soybeans to ease tight supplies of soybean oil. Meanwhile, demand for rapeseed meal used in fish farming has dropped as unwanted tilapia fish are piling up.

Soybeans get the most attention, but rapeseed is the second-largest segment of China's edible oil supply. Unlike soybean oil (derived almost entirely from imported beans), rapeseed oil is produced from three sources: crushing domestic seeds, crushing imported seeds, and refining imported rapeseed oil. 

Estimated from Ministry of Agriculture, China Agricultural Supply & Demand Estimates (CASDE)
and USDA's PS&D database.

China imports all of its palm oil. The country produces peanut and cottonseed oils from homegrown crops. China also imports sunflower and sesame oils while also processing homegrown sunflower and sesame seeds.  

The rapeseed supply's reliance on imports is a food security concern for Chinese officials. Rapeseed--including the Canadian variety canola--is also a political cudgel used in relations with Canada. 

In September 2024 China announced an antidumping investigation of canola seed imported from Canada. This announcement was both a retaliation against Canada's 100-percent tariff on Chinese electric vehicles and a measure intended to slow down a surge of imports that hit China during the 2024 harvest season. Two months ago in March 2025, China announced 100-percent tariffs on Canadian canola oil and meal.

A group of Chinese futures market analysts recently toured rapeseed oil processing and trading companies in Sichuan Province and Chongqing Municipality in southwestern China. The study tour found that local processors and traders deep in China's interior are tied into the world market through shipments of rapeseed and rapeseed oil arriving by rail and truck from ports in southern China, by barge on the Yangtze River from eastern regions, and on the China-Europe express railway that crosses from Russia into western China. 

No antidumping tariffs on canola have yet been announced, but the Sichuan-Chongqing study tour learned that Chinese importers have been stockpiling imported canola and oil in anticipation of higher tariffs. Sichuan and Chongqing companies are also watching global developments such as impacts of Indonesian weather and Malaysian replanting on palm oil production and prices, delays in customs clearance of soybeans imported from the U.S., the size of the Brazilian soybean crop, relaxation of Argentina’s foreign exchange controls, and U.S. biodiesel policy.

This region traditionally relied on local rapeseed for the chili-infused oil that forms the base of local hotpot and other fried cuisine. Rapeseed oil is still more prevalent in Sichuan and Chongqing than in other regions, but soybean oil has made inroads. Varying estimates suggested that soybean oil's use in Sichuan, Chongqing and other southwestern provinces is equal to or slightly larger than rapeseed's use.  Cottonseed oil is also shipped to Chongqing from Xinjiang, China's main cotton region.  

One processor in Sichuan observed a clear declining trend in local consumption of oils over the past 2 years, likely reflecting the poor state of China's economy. Another indication of hard times for consumers is the 20-to-30 percent drop demand for premium-priced specialty oils estimated by one interlocutor. A food trader commented that restaurant and food processing business is slack, and household consumption of oil has not changed much.

The region has 9 edible oil processing facilities with excess capacity. One company said it uses only 1 or 2 of its 8 production lines. Large companies are gradually crowding out small competitors.

Sales of rapeseed oil in the region are split between sales for home use in shops and supermarkets (30%), restaurants (40%), and food processors (30%). The team heard that large processors and restaurant chains tend to substitute soybean and cottonseed oils for rapeseed oil when price spreads widen, but small restaurants and consumers are less price sensitive. One food trader told the study team that it is a false proposition that Sichuan cuisine must use rapeseed oil.

In interviews with futures analysts, companies indicated the low cost of soybean oil is the main driver of its popularity. A trader told the futures analysts that the low price of soybean oil has driven its substitution for rapeseed oil in Chongqing. Recent data shows rapeseed oil is currently the most expensive of 3 major vegetable oils in China. A surge in price during March 2025 coincided with the announcement of 100% tariffs on Canadian oil and meal.  Soybean oil is currently the cheapest oil, even cheaper than palm oil which traditionally has been the cheapest. This year palm oil's price has declined from an unusually high level last year.

Wholesale prices reported by China State Administration of Food and Commodity Reserves
in Jiangsu for soybean and rapeseed oil, Guangdong for palm oil.

Despite the relatively low price of soybean oil, companies mentioned that supplies of soybean oil are tight. A Chongqing company attributed the tight supplies to strict inspections and lengthy customs clearance times meant to keep out North American soybeans. They agreed with other assessments that soybean supplies may rebound when supplies of Brazilian beans increase later in May. One person interviewed predicted that soybean meal supplies could rebound if China-U.S. negotiations are successful in June.

China has imported 732,000 metric tons of rapeseed oil in the first 3 months of 2025. Nearly half of the imports came from Russia, but companies complained about difficulties settling transactions--probably due to sanctions--that require use of a Chinese intermediary in the transactions. During calendar year 2024 imports from Russia topped 1 million metric tons. More than half of Russian rapeseed oil arrives on the China-Europe express rail line. One processing plant complained about the uncertainty of Russian rapeseed oil supplies. Imports of canola oil from Canada surged in the first 3 months of the year as companies appeared to be rushing to beat tariffs. 

Data from China Administration of Customs.

China has imported 900,000 metric tons of rapeseed in the first 3 months of 2025, of which 842,000 metric tons of canola came from Canada. Canola seed imports from Canada surged to over 6 million metric tons in calendar year 2024, prompting the antidumping announcement. Imports of rapeseed from Russia are much smaller. One processor in Sichuan noted that Russia requires that rapeseed be processed in Russia. Another noted that Russian rapeseed meal has excessive fiber. Rapeseed meal from India contains toxins that make it unsuitable for aquaculture.

One feed mill said it had reduced rapeseed inclusion in its formula after announcement of the 100% tariff on Candian rapeseed meal. Local rapeseed meal availability increases after the local rapeseed harvest which is late this year due to weather issues. Cottonseed meal, rapeseed cakes, and DDGS were identified as substitutes for rapeseed meal. Environmental regulations are cutting back aquaculture production in China.

Soybean meal has been in tight supply since April 2025. Inventories are 3-to-5 days, down from a customary 10 days.

Companies interviewed on the study tour mentioned that U.S. tariffs have cut China's export sales of pond-raised tilapia fish--many of which are produced for the U.S. market. This also drove down the price of grass carp. Declining fish production has reduced demand for rapeseed meal, cutting into profits from rapeseed crushing.