Brazilian Soybeans May Still Have an Edge Despite U.S.-China Agreement

The temporary 90-day suspension of reciprocal tariffs between the United States and China has added more volatility to the soybean market on the Chicago Board of Trade (CBOT). With the agreement potentially reopening the door for American soybean sales to China, July futures rose 1.85% in yesterday’s session, closing at US$10.7125 per bushel.

According to Rafael Silveira, an analyst at Safras & Mercado, the agreement could prompt China to redirect part of its soybean demand to the U.S. “The trade war and Chinese retaliations made any business between the two countries unfeasible. Now, with the tariff reduced to 10%, the agreement could be crucial for China to advance purchases of soybeans from the new [2025/26] crop during this 90-day window,” he said.

However, he noted that even if trade relations between the U.S. and China improve, Brazil remains a key player in Chinese soybean imports.

“The agreement pressures Brazilian exports, but they should not decline significantly. Brazilian producers have already sold 100 million tonnes, and a large portion of that was allocated for export,” Silveira added.

Marcela Marini, senior analyst for grains and oilseeds at Rabobank, stated that China has already purchased 20 million tonnes of U.S. soybeans from the 2024/25 crop. She believes the tariff cut creates space for U.S. exports starting in August. However, like Silveira, she does not see the trade agreement as a major obstacle for Brazilian soybeans.

According to Marini, the key will be what happens in the year’s second half, should the agreement be upheld. Previously, under retaliatory tariffs, we expected Brazil to export soybeans to China through December. Now, there’s uncertainty about the pace of Chinese buying and the competitiveness of Brazilian soybeans, especially with the arrival of the U.S. harvest,” she said.

Silveira also pointed out that the U.S.-China agreement may directly impact the soybean premium at Brazilian ports, which could turn negative if Brazilian soybeans are sidelined in favor of U.S. grain. The Paranaguá (PR) soybean premium is US$0.75 per bushel for August shipments. The premium represents the difference between the physical market price in a given location and the CBOT futures price.

According to the U.S. Department of Agriculture (USDA), Chinese soybean demand is expected to remain strong. Yesterday, the agency estimated Chinese imports to be 112 million tonnes in the 2025/26 cycle, up 4 million from the current crop. This bullish outlook supported the price hike in Chicago.

The USDA’s first supply and demand report for the new cycle, which begins in September, also impacted corn prices on the CBOT. July corn futures fell 0.39%, closing at US$4.48 per bushel.

According to the USDA, global corn production is expected to reach 1.26 billion tonnes in 2025/26. That would be a 3.5% increase over the current crop if confirmed. In the U.S., where expectations weigh more heavily on prices, the harvest could hit 401.85 million tonnes, up 6% from the current season and setting a new record.

Wheat prices also fell in Chicago due to robust global production estimates. July futures closed down 1.25%, at US$5.1525 per bushel. The USDA projects a record global wheat crop of 808.5 million tonnes for the 2025/26 season.

However, the U.S. forecast is for a reduced wheat harvest of 52.28 million tonnes, down 1.37 million tonnes from the previous season. Still, ending stocks in the U.S. are expected to rise from 22.90 million tonnes to 25.12 million tonnes in the next cycle.

(Reporting by Fernanda Pressinott and Cleyton Vilarino, São Paulo)

Source: Globo Rural

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