Brazilian soybean dominance limits potential gains from new U.S.–China deal

When the United States and China ended their previous trade war in 2020, U.S. soybean farmers saw exports surge to near-record levels. This time, however, any new deal is expected to bring far more modest gains.

President Donald Trump and his Chinese counterpart Xi Jinping are expected to approve, later this week during an in-person meeting in South Korea, the terms of a preliminary agreement negotiated by their trade teams.

The deal will include “substantial” purchases of American soybeans, according to U.S. Treasury Secretary Scott Bessent on Sunday.

Soybean prices rose ahead of the meeting on optimism about a deal, and futures hit their highest value in 15 months on Tuesday (28).

Even so, the agreement is unlikely to reverse the long-term shifts in global trade that have reduced U.S. producers’ presence in China.

In recent years, Beijing has become far less reliant on American supply as Brazil — now the world’s largest producer — rapidly expanded production and captured a bigger share of world exports.

At the same time, China’s economy has slowed, leaving less room for an aggressive purchase commitment.

China is not expected to import more than 10 million tonnes of U.S. soybeans in the crop year ending in August, according to estimates from StoneX Financial.

That would be the lowest volume in a full season since 2006, based on data compiled by Bloomberg.

Any amount above that “would be a bonus,” said Arlan Suderman, chief commodities economist at StoneX, in a note to clients on Monday.

The world’s largest buyer of soy — used in animal feed and cooking oils — has managed to avoid imports from the current U.S. crop altogether, sourcing most of its supply from South America.

If a deal is signed, U.S. exporters will have only about two months to sell soybeans to China before Brazil floods the market again with what is expected to be another record harvest.

“China has much more bargaining power today than in the past,” said Vinicius Ito, director at Marex Group, who estimates China will buy no more than 8 million tonnes of U.S. soybeans through January. “There is no reason for China to keep buying from the U.S. when supply from Brazil is more abundant and cheaper.”

According to Ito, China could still regularly buy around 20 million tonnes of U.S. soybeans per season, as long as Brazil does not suffer a major crop failure. Even so, that would be far below the more than 36 million tonnes the U.S. shipped to China in the 2020-21 cycle — the result of the “Phase One” agreement that ended the first tariff war between the two countries.

While that deal prompted a temporary spike in U.S. sales, trade tensions during Trump’s first term also pushed Beijing to adopt a long-term strategy to diversify agricultural purchases and reduce its dependence on the U.S.

Since then, the U.S. position has weakened further as competition has intensified and Brazilian producers continued to expand planted area at a rapid pace.

Brazil’s total soybean exports are projected to reach 112 million tonnes in the 2025-26 season — nearly 60 million more than a decade ago, when Trump first took office — according to the U.S. Department of Agriculture. That volume would be enough to cover all of China’s forecast imports this season.

Meanwhile, American supply has essentially stagnated. Anticipating a potential trade war, U.S. farmers cut soybean planting by 7% this year.

“South America, especially Brazil, is expected to remain China’s main supplier, which could further erode the U.S. market share even if trade tensions ease,” said Kang Wei Cheang, an agricultural broker at StoneX Group in Singapore.

“At the same time, Chinese domestic demand growth is likely to moderate, with more efficient animal feed and stabilized soybean meal consumption curbing import growth.”

Below is a comparative chart of Brazilian soybean exports to China for the first eight months of the year over the last four years. The chart was prepared using DataLiner data:

Brazilian Soy Exports to China | January to August 2022–2025 | WTMT

Source: DataLiner (Clique aqui para solicitar uma demo)

In addition, the U.S. is allocating a growing share of its harvest to biofuel production for trucks, as companies like Bunge and Cargill move to capitalize on incentives for sustainable fuels. That leaves less soy available for export at competitive prices.

The U.S. is trying to diversify its export markets to reduce dependence on China, striking deals with partners such as the United Kingdom. On Tuesday, Agriculture Secretary Brooke Rollins announced that Japan has agreed to buy US$8 billion in corn, soybeans, rice, ethanol, and other products.

“We are fortunate to have a fairly broad network of destinations for U.S. soybeans,” said Jim Sutter, CEO of the U.S. Soybean Export Council. “What we want is for there to be no barriers to American soy entering China.”

Any deal with Beijing would be welcome, said Eric Larson, general manager of James Valley Grain, a cooperative involved in grain storage and handling.

“It is soy moving — and that’s a good thing,” Larson said in an interview. “But I don’t think it changes much.”

Source: Bloomberg Línea

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