By Karen Braun
NAPERVILLE, Illinois (Reuters) – Brazil’s slow soybean harvest means that supplies are not reaching buyers as quickly as they might have hoped.
But China, the destination for more than 70% of Brazil’s annual soy exports, does not appear concerned.
A delayed Brazilian harvest can sometimes widen the export window for U.S. soybeans, but both overall shipments and participation from China have recently been lackluster.
U.S. soybean export sales to China spiked for a week in mid-January, but that may have been a one-off event. Weekly volumes have been mostly below average in the last couple of months, even when compared against relatively lighter expectations.
As of Jan. 23, U.S. export sales to China for the 2024-25 marketing year accounted for 47% of all bookings, a 17-year, non-trade-war low. Another 9% of sales are assigned to unknown destinations, which is close to normal and not indicative that Chinese purchases are being hidden.
Volume-wise, Chinese bookings of U.S. soybeans are down 3% on the year, similar to the year-on-year reduction that the U.S. Department of Agriculture predicts for China’s 2024-25 soy imports.
But China’s recent intake has fallen well short of that mark due to smaller shipments from Brazil. November-December imports declined 15% on the year despite an equivalent rise in U.S. arrivals.
Aside from the Brazilian delays, China’s agriculture minister last week said that the country’s hog sector had recovered from a loss-making phase, which in theory would support soybean demand. Chinese soybean crush margins have also improved in recent weeks.
These factors and stats prevent a favorable spin on China’s involvement in the U.S. soybean market as of late. Some industry members suggested China stocked up on U.S. soybeans ahead of potential trade tariffs, but U.S. export data does not support that idea.
Chinese arrivals may remain thinner for several more weeks as Brazil’s January exports likely fell well short of last year’s levels as well as previous expectations.
But Brazilian bean supplies should be plentiful from next month, and they are competitively priced. Shipping lineups suggest Brazil’s February soy exports will top average levels and possibly even challenge year-ago volumes, despite this year’s harvest delays.
It is not all bad news for the United States. Despite USDA’s below-average 2024-25 export forecast, U.S. soybean sales to non-China destinations are the third-highest ever for the date and up 30% on the year. Sales to Europe in particular are well above normal.
But China is still critical, accounting for 54% of all U.S. soybean exports in 2023-24. It is unclear if this trade flow will be threatened further since U.S. President Donald Trump as of Thursday was considering imposing tariffs on Chinese goods, potentially as early as this weekend.
However, soybean prices are reflecting the grim situation, especially relative to corn. U.S. farmers this spring are expected to ditch a significant number of soybean acres versus last year in favor of the yellow grain, which could help keep U.S. soybean supplies in check.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Writing by Karen Braun; Editing by Matthew Lewis)
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