In Singapore and Beijing on January 17, Chinese soybean processors are favoring competitively priced Brazilian cargoes over U.S. oilseeds due to concerns about potential import tariffs following the inauguration of President-elect Donald Trump on January 20.
Apprehensions regarding escalating trade tensions under Trump's forthcoming administration have disrupted trade patterns to China, prompting buyers to stockpile inventory and explore alternative suppliers.
Chinese processors have reportedly secured nearly all of their first-quarter soybean shipments from Brazil. Last year, Brazil constituted 54% of Chinese first-quarter soybean imports, while the U.S. supplied 38%. China holds a majority share of global soybean shipments.
A trader in Singapore mentioned, "Chinese crushers are now booking Brazilian cargoes for February and March shipment – a 100% shift from U.S. to Brazil."
Potential tariffs of 10% to 60% on Chinese goods by Trump could lead to retaliatory duties on U.S. farm products. The U.S.-China trade tensions during Trump's first term resulted in a significant decline in China's soybean imports from the U.S., with a notable increase in imports from Brazil.
South American soybeans, primarily from Brazil, are dominating global trade early in the year, forcing Chinese importers to rely heavily on Brazilian beans over U.S. supplies. This shift is anticipated to leave the U.S., the second-largest soybean exporter, with surplus beans at the end of the current marketing year.
The attractiveness of competitive prices of Brazilian soybeans is a major factor driving Chinese importers towards them.
Analysts note that concerns over potential trade disputes and favorable conditions in Brazil have spurred increased soybean purchases, leading to a rise in imports.
Despite the wider price gap between U.S. and Brazilian soybeans, the expectation of an oversupply may limit overall soybean demand despite forecasts of decreased quarterly imports by China.
China's record soybean imports in 2024 have led to an oversupply scenario with expectations awaiting the new Brazilian crop. While private buyers favor Brazilian supplies, state stockpiler in China is still seeking U.S. soybeans due to their higher oil content.