US losing out on China soybean sales as Brazil fills key supply period

Yahoo

3 hours ago

By Naveen Thukral and Ella Cao
SINGAPORE/BEIJING (Reuters) -U.S. soybean exporters risk missing out on billions of dollars worth of sales to China this year as trade talks drag on and buyers in the top oilseed importer lock in cargoes from Brazil for shipment during the key U.S. marketing season, according to traders.
Chinese importers have finished booking soybean cargoes for September, taking around 8 million metric tons, all from South America, three traders told Reuters.
For October, Chinese buyers have secured about 4 million tons - half of their expected requirement - also from South America, the traders said.
"China's heavy Q3 soybean purchases suggest the industry has built up inventories ahead of potential Q4 supply risks," said Wang Wenshen, an analyst at Sublime China Information.
Last year, Chinese oilseed importers bought around 7 million tons from the U.S. for shipments during the two months.
The risk of a prolonged absence of Chinese purchases for the U.S. crop year starting in September amid unresolved trade tensions could add pressure on Chicago futures trading not far from five-year lows, traders said.
Typically, most Chinese purchases of U.S. soybeans are shipped between September and January, before Brazilian supplies take over after South America's harvest.
Chinese buyers are expected to complete this year's October bookings by early next month, said a trader at an international firm in Singapore.
There could be some room for U.S. to sell soybeans towards the end of 2025 or early next year, but volumes are likely to be limited if tariffs remain.
"The consensus is that Brazil won't have enough beans, when all is said and done, to satisfy China's import requirements," said Terry Reilly, senior agricultural strategist for Marex.
"So there's going to be a shortfall late in the season. On a Brazilian crop year basis, they may fall short by about two to five million tons."
China has been cutting its dependence on U.S. agricultural products since the trade war under President Donald Trump's first term.
Last year, China imported roughly 105 million metric tons of soybeans. Of that, 22.13 million tons came from the U.S., worth $12 billion.
TRADE TENSIONS CLOUD OUTLOOK
On Sunday, Trump urged China to quadruple its soybean purchases ahead of a tariff truce deadline, a target that analysts said was unfeasible as it would require China to buy almost exclusively from the U.S.
The next day, the two sides extended their tariff truce by 90 days.
However, three traders told Reuters the extension by itself was unlikely to spur purchases, as Beijing's tariff on U.S. soybean imports remains at 23% - making them uncompetitive.
China could resume buying U.S. soybeans if an agreement to reduce duties is reached.
"One possible scenario is that if both sides reach a deal in November, China could resume buying U.S. soybeans, potentially extending the U.S. export window and putting pressure on Brazil's new-crop sales," said Johnny Xiang, founder of Beijing-based AgRadar Consulting.
Excluding tariffs, U.S. soybeans for October shipment are around $40 per ton cheaper than Brazilian cargoes being bought by China, two traders said.
China has plentiful soybeans on hand after stepping up imports with purchases hitting record highs in recent months.