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.