Private crushers are largely out of the market while state buyers alone carry China's US soybean pledge, and Brazil's next harvest isn't due until early 2027.
Bloomberg reported Thursday that Chinese private crushers are pulling back sharply from Brazilian soybeans. Commercial purchases totaled fewer than five cargoes in the past two weeks, down from roughly 20 a week in August. Negative crush margins have made the supply unprofitable to process, traders familiar with the matter told Bloomberg.
Key Facts
- Down from roughly 20 cargoes a week in August, Brazilian purchases fell below five in two weeks.
- October-December crush margins ran 150 to 230 yuan, or about $22 to $34, a ton in the red.
- China's state buyers purchased about 11 million tons of US soybeans after May's Trump-Xi meeting.
Private processors are the backbone of China's soybean crushing industry. They have leaned on Brazilian cargoes since tariffs shut most US supply out last year. This strategy stops working once Brazilian prices climb high enough to erase the crush margin.
China's Soybean Crush Margins Turn Negative
China's soybean crush margins turned negative for the fourth quarter, Reuters reported. Shanghai JC Intelligence Co. analyst Rosa Wang and three other traders and analysts confirmed the shift.
Theoretical margins for October-through-December shipments ran 150 to 230 yuan ($22 to $34) a ton in the red. The math held for both Brazilian and US beans, even without an additional 10% tariff on US cargoes.
The shortfall compounds a separate problem on the demand side. Beijing is working to shrink China's pig herd this quarter. The goal is to limit hog weights and stabilize an oversupplied market, per Reuters.
Fewer pigs mean less soymeal demand, the main product crushers extract from the beans.
State Buyers Bought 11 Million Tons of US Soybeans
China's state-owned traders have taken a different path. State buyers purchased about 11 million metric tons of US soybeans after President Xi Jinping's May meeting with President Donald Trump in Beijing, traders told Reuters.
By contrast, private crushers have largely avoided North American cargoes because of the tariffs still in place.
"We are not considering US soybeans because of the tariffs," a China-based crusher told Reuters. The crusher said they would recalculate whether US cargoes could turn a profit if tariffs come down.
Johnny Xiang founded AgRadar Consulting in Beijing. Private crushers will eventually need access to US supply as South America's marketing season winds down, the analyst said. Any shift depends on a tariff cut.
Crushers could otherwise turn to reserve auctions from Sinograin, China's state grain reserve.
Trump-Xi Summit Ends Without New Purchase Details
President Trump hosted President Xi Jinping at the White House this week, and the meeting produced no new specifics on agricultural purchases.
Treasury Secretary Scott Bessent announced the two countries had extended their trade truce by two months just as Xi's plane landed.
Grain futures fell on the lack of detail. December corn and December SRW wheat futures each fell to four-week lows. HRW wheat futures touched a six-week low, Pro Farmer reported Friday.
Buyers are watching for a decision on the 10% tariff still applied to US soybean imports. Brazilian soybeans for November shipment carried a premium of $3.15 to $3.20 a bushel over Chicago futures, cost and freight included.
Comparable US Gulf cargoes were quoted at $3.20 to $3.25 a bushel before tariffs, Reuters reported. Brazil's next harvest is not due until early 2027.
