US-China Soybean Trade

Recent reports highlight an apparent soy glut in China, leading to the question of whether even a fully-fledged trade deal or an extension of lower tariffs between China and the US will be sufficient to absorb expected large US supplies. Reuters reports crushers have been under strain as margins have turned negative, with some having shut down due to issues with storage constraints and even shipping soy oil to India at a discount to South American supplies.

The USDA is yet to make a downward revision for US soybean exports based on tariffs. In the most recent monthly report, the organisation lowered soybean exports 1.9 Mt from the last report to 47.5 Mt in 2025/26 (Oct/Sep), only 6% lower y-o-y, citing increased domestic utilisation. For comparison, in the 2018/19 market year, when the previous trade war had escalated to include soy, US-China soybean shipments fell 40% y-o-y to 14.4 Mt. While the US increased exports marginally to other destinations, namely the EU (+26% to 7.4 Mt) and other East Asian nations (+16% to 5.5 Mt), China’s predominance as a soybean importer resulted in US total exports falling 12% to 48.3 Mt. Based on what happened under the last trade escalation, it appears a net negative for vessel demand, as excess US beans were stored (doubling to 25.2 Mt) and alternative suppliers were unable fill the gap to China in a short time frame.

This year, Brazilian soybean shipments to China climbed 5% y-o-y at 48.4 Mt in 1h and while vessel tracking data suggest July volumes are up 40% to 9.9 Mt, the export season winds down in the second half of the year. Chinese traders have also reportedly booked a shipment of soybean meal from Argentina for July, the first time since China allowed imports from the country in 2019, Reuters report. While it is only one shipment, the import of meal from Argentina indicates a more diversified purchasing strategy, as China typically imports soybeans for its own domestic crushing industry. Soymeal imports were also approved from Uruguay in June and Ethiopia in July.

The ramp up from Brazil and other smaller producers suggests China is preparing for the upcoming months to fill gaps in its demand, even switching to import meal. However, alternative producers are unable to match volumes involved in the typical fourth quarter US-China trade. Chinese importers are also likely to resist booking US shipments ahead of the August 12 deadline concluding 90 days of lower reciprocal tariffs between the two nations. All the while, demand issues in China will also weigh on US exports in 4q, even if trade relations are normalised, as most of the imported beans are directed towards the country’s plateauing hog herd.

By Cara Hatton, Dry Bulk Analyst, Research, SSY.