Symbolic Soybean Meal Moves Ahead of Trade Tensions

Recent announcements seem to point to China becoming a soybean meal importer. Large-scale Chinese imports of soybean meal would be a change from its historical practice of importing soybeans to be processed in one of China's dozens of processing plants with annual capacity of over 150 million metric tons. 

• On July 7, Reuters reported that a 30,000-metric-ton soybean meal shipment will leave Argentine for China this month, the first major shipment since China approved Argentina as a soybean meal supplier in 2019. The shipment had been booked in late June by a group of Chinese feed millers. 
• On July 3, Chinese customs officials approved Ethiopia as a soybean meal supplier to China.
• On June 6, Chinese customs officials approved Uruguay as a supplier of soybean meal and rapeseed meal.

Argentine officials were effusive over this month's shipment and were optimistic that this would be followed by more. At least one industry analyst interpreted the Argentine shipment as a "tectonic shift" in trade patterns. Others were skeptical, interpreting the shipment as largely symbolic as China scrambles to find alternatives to U.S. soybean supplies.

Soymeal from Argentina--the world's leading soybean meal exporter--was granted access to China in 2019, but no major soymeal shipments were made until this month. 

China's customs administration had previously granted access for soybean meal imports from Kazakhstan in 2023, and access was granted for soymeal from Zambia, Belarus and Brazil in 2022. 

This month's Argentine shipment is about equal to China's annual imports of soybean meal in recent years of 30,000-to-50,000 metric tons. These imports are a drop in the bucket compared with China's imports of whole soybeans exceeding 100 million metric tons. China has actually been a net exporter of about 1 million metric tons of soybean meal in most years since it joined the WTO in 2001. Exports act as a valve to release excess meal into the market during years of slow demand or an excessive soybean crush volume. 

Data from USDA PS&D database.

China's soybean crushing industry prefers to keep the soybeans flowing. China did import soybean meal briefly in the 1990s when authorities experimented with a value added tax (VAT) waiver on imported soybean meal, but a spurt of meal imports drove down margins for Chinese crushers--who complained loudly--and the VAT waiver was quickly rescinded. Tariffs set by China's WTO membership in 2001 favor imports of beans with a tariff of 3% versus a 5% tariff for soybean meal and 15% for soybean oil. Chinese officials and official news media have complained for 2 decades about ballooning soybean imports but never imposed antidumping or safeguard duties. (China did launch an antidumping investigation of canola seed in September 2024 and a 100% duty on canola oil and meal in March of this year.)

Chinese authorities have kept soybean meal trade under tight control until now, a practice that protects the profits of the crushers. For example, in 2020 Chinese customs announced that inspectors seized a shipping container loaded with 26 tons of illegally imported soybean meal containing "multiple genetically modified ingredients and other harmful materials." The recent approvals of soybean meal importers also come with extensive requirements for foreign material, traceability, labeling, and processor certifications. 

China Customs publicity photo of inspectors checking soybean meal in 2020 at the port of Ningbo.

There may be powerful interests in China's soybean crushing who have an interest in keeping the bean imports flowing. State-owned players along with Singapore-based Wilmar's Yihai Kerry subsidiary dominate the top 10 crushers in China who account for about 85 percent of production. State-owned COFCO is the top crusher with 30 crushing facilities that it needs to keep in operation. Multinationals Cargill, Bunge, and Louis Dreyfuss have a combined market share roughly equal to COFCO's. Other state-owned crushers include Sinograin with a vast network of subsidized warehouses and storage tanks holding national reserves, and Jiusan, subsidiary of a sprawling state farm network in northeastern China that also crushes imported beans. There could be influential backers behind the 3 private Chinese companies still in the top 10. 

A Chinese commentator conjectured that the Argentine shipment is a symbolic test to signal that imports of soybean meal can help China muddle through trade tensions with the U.S. that may restrict imports of soybeans in the fall months. The commentator was doubtful that large amounts of soybean meal will be imported, noting the potential impact on soybean crushers.  The commentator warned that China's soymeal market could come under greater supply pressure with about 30 mmt of South American soybeans expected to arrive in the next 3 months.

Argentina and Brazil are the world's top soybean meal exporters, but meal from those southern hemisphere countries faces the same seasonal availability problem as their soybeans. Meal is also hard to store and stockpile. Other soybean meal suppliers recently approved by China (Belarus, Russia, Ethiopia, Kazakhstan, Uruguay and Zambia) exported a combined total of less than 1,300 metric tons of soybean meal last year, according to USDA's PS&D. So it's not clear where imports of soybean meal to tide China over would come from to replace U.S. beans if the trade spat continues into the 4th quarter of 2025.

Yesterday's quotes at China's Dalian futures market indicate expectations of a modest rise in soybean meal and soybean prices over coming months. The soybean meal futures contract for September 2025 delivery shows a 6.2-percent premium over meal delivered this month, while the December contract has an 8-percent premium over July. Soybean oil futures, in contrast, show no premium for September or December over July. Chinese cash prices for soybean oil have been flat this year. The cash price for soy oil is still below prices of rapeseed and palm oil.

Prospects for a big uptick in China's imports of soybean meal don't look promising. The Argentine soymeal shipment may have been meant to send a signal of confidence ahead of possible renewed trade tensions. The Ethiopian soymeal approval followed a Chinese meeting African nations and may have been meant to send a similar signal. 

The Chinese market indicates some concern about tighter supplies of soybean meal later this year if trade tensions with the U.S. are not resolved. But the magnitude seems modest. It helps that Chinese soybean meal prices are currently at a relatively low point due to the influx of Brazilian soybeans and tepid downstream demand. According to Shanghai Mysteel price monitoring, the average soybean meal price in early July is down about 11 percent from a year earlier. A soymeal price increase of 6-to-8 percent would not be unusual (soybean meal is one of the more volatile prices among non-perishable commodities in China) and could return the price to about where it was a year ago.