China wants US soybeans. Its buyers prefer Brazil

If China is committed to buying American soybeans, why do its private importers continue to favour Brazil? The answer lies in the gap between Beijing’s bilateral trade commitments and the commercial incentives governing China’s soybean market.

On 28 September, China’s Ministry of Commerce announced a framework to reduce tariffs on about US$30 billion of American goods. The list covers corn, wheat, sorghum, soybean meal and soybean oil, but excludes commercial soybeans. As a result, American soybeans continue to face a reported 13% import duty — a 3% “most favoured nation” (MFN) tariff plus an additional 10% levy — compared with the 3% MFN rate on Brazilian beans.

This tariff gap sits uneasily alongside Washington’s account of China’s purchasing commitments. Following the October 2025 meeting between US President Donald Trump and Chinese President Xi Jinping in Busan, the White House said Beijing had committed to buying at least 25 million tonnes of US soybeans annually from 2026 to 2028, a commitment China has not publicly confirmed. Washington also announced a commitment for China to buy US$17 billion in American agricultural products annually in the same period, in addition to the soybean purchases.

Despite the tariff disadvantage, traders have reported substantial state-backed purchases of US soybeans since the leaders’ May 2026 meeting. At the same time, China’s agriculture ministry forecasts imports of 95.5 million tonnes in the 2026-27 marketing year, a drop from its 108-million-tonne estimate for 2025-26. This apparent contradiction illustrates the two tracks of China’s soybean trade: state-owned enterprises (SOEs) can help fulfil bilateral commitments, while private processors continue to weigh prices, costs and demand.

How the two tracks work

China imported 111.833 million tonnes of soybeans in 2025, against domestic production of 20.91 million tonnes. The leading suppliers included Brazil, which supplied 73.6% of imports, compared to 15% from the US and 7.1% from Argentina. The US share had fallen from 21% in 2024, reflecting trade tensions and China’s ability to source from alternative suppliers.

Unlike wheat, corn and rice, soybeans are not subject to import quotas. Thus, import decisions are particularly sensitive to relative prices, availability, freight costs and demand from China’s processing industry. State purchases and reserves give Beijing additional tools to influence the market, but do not remove these commercial constraints.

Demand may also weaken. China’s agriculture ministry expects soybean crushing to fall from 101.5 million tonnes in 2025-26 to 94 million tonnes in 2026-27, and projects imports to decline to 82.55 million tonnes by 2035. China’s sow herd was down 6.5% year-on-year in June 2026, while government efforts to reduce soybean meal’s share of animal feed from 14.5% to below 13% could further moderate demand. These measures reflect Beijing’s efforts to manage feed costs and reduce reliance on imported protein while navigating trade tensions.

For private crushers, the calculation is straightforward: will the value of the soybean meal and oil produced cover the cost of the beans, freight and processing? The additional US tariff makes American supplies less competitive when Brazilian beans offer lower landed costs or better processing returns. State-backed purchases can support bilateral commitments, but private processors have little reason to follow suit unless the commercial case improves.

Customs data offer a revealing, though imperfect, indication of how these incentives shape trade. An analysis by agricultural economist Fred Gale found that, from January to May 2026, 22.68 million tonnes of Brazilian soybeans were recorded against companies registered across 23 Chinese provinces. By contrast, all 8.38 million tonnes of US soybeans in the data were associated with Beijing-registered companies. Gale attributes the US purchases to state-owned traders China National Cereals, Oils and Foodstuffs Corporation (COFCO) and China Grain Reserves Group (Sinograin).

These figures require two caveats. A company’s registered location does not establish where its soybeans were ultimately processed or consumed. Moreover, purchases, shipments and customs-recorded arrivals represent different stages of trade. The reported 13.7 million tonnes in state-backed purchases should therefore be treated as an estimate of purchases, not a confirmed volume of arrivals.

Beijing’s official position accommodates both policy objectives and commercial decision-making. Commerce ministry spokesperson He Yadong has said the two sides agreed on “indicative targets” to expand two-way agricultural trade, while companies continue to make decisions according to market principles and demand. Bilateral targets can encourage purchases, but the volume and timing of actual imports still depend on market conditions.

The table shows that the US share of arrivals fell from 26.7% in January-April to 14.4% in January-August. Calculated by subtracting the ministry’s January-April figures from its January-August figures, US beans accounted for just 8.04% of arrivals in May-August (3.936 million of 48.956 million tonnes), when Brazil’s harvest dominated shipments. This is consistent with the two-track pattern: reported state-backed purchases did not translate into a comparable share of arrivals over the period.

The figure does not, on its own, establish why US arrivals remained low. Seasonal harvests, shipment schedules, prices and tariffs all shape import composition. The customs data illustrate the gap between bilateral purchasing commitments and the market’s actual flow of goods, rather than proving that state purchases had no effect.

Beijing’s room to manoeuvre

The approach also serves China’s food security priorities. Xinhua, reporting on Agriculture Minister Zhang Zhu’s briefing, noted that China has ample staple-grain supplies but faces tighter conditions in feed grains. Diversifying soybean suppliers reduces dependence on any single source, but does not guarantee affordable or reliable imports: prices, shipping, processing capacity and domestic demand still determine whether supplies can be used economically.

Beijing’s challenge is to balance supply security and manageable input costs with the commercial health of its feed and crushing industries. State purchases can help fulfil diplomatic commitments and diversify supply, but cannot indefinitely substitute for viable demand from processors and livestock producers

Reserves, margins and who bears the costs

The political economy question is how the benefits and risks of the two-track system are distributed. State-backed purchases can sustain bilateral trade, while private crushers may face pressure if imported beans cost more than the meal and oil they produce can earn. Beans may enter commercial channels or state reserves, but neither outcome guarantees that they can be absorbed profitably at prevailing prices.

Reserve auctions illustrate how uptake can vary. On 12 August, the National Grain Trade Centre offered 516,000 tonnes of imported soybeans on Sinograin’s behalf, with 89% reportedly sold. At the 28 September auction, only 37.3% of the 514,000 tonnes offered was sold. The lower take-up may indicate weaker buying interest, but without comparable information on lot quality, prices and sale conditions, the difference alone cannot explain the change.

Industry estimates in September indicated negative crushing returns on both Brazilian and US shipments. Importers had covered much of their November requirements but were buying little for December and January. Some processors may consequently need tariff relief or reserve supplies to keep plants operating, yet neither measure necessarily restores profitability if feed demand remains weak or inventories are high.

These pressures do not establish that state purchases impose a net cost on taxpayers or that private markets are inherently more efficient. Assessing who ultimately bears the costs would require data on purchase prices, storage expenses, resale values and how any losses are allocated. The key distinction is that fulfilling bilateral commitments and maintaining commercially viable processing are related but separate objectives.

Brazil has benefited from its competitive position and the tariff differential, but its market share is not guaranteed: shifts in Chinese demand, harvests, prices or trade relations can redirect purchases. For US exporters, renewed access to China offers an opportunity, but announced commitments alone do not guarantee a lasting recovery. China bought US$4.9 billion worth of US soybeans from January to July, compared with US$5.2 billion in all other US agricultural and food goods over the same period. The exclusion of soybeans from tariff relief has consequently drawn criticism from US agricultural interests concerned about lost export opportunities. For American exporters, regaining market share will require supplies that private Chinese buyers can justify on commercial grounds as well as purchases made under bilateral arrangements.

What will determine the balance?

Three factors will help determine whether the two tracks converge or remain distinct.

First, trade policy and geopolitics. The current trade truce runs through 10 January 2027, and an agricultural working group is expected to meet before the end of 2026. 

Soybeans are both a food-security commodity and a bargaining instrument. For Beijing, sourcing from Brazil offers a geo-economic hedge as well as a commercial alternative, while the treatment of US beans is likely to reflect the broader state of bilateral relations. Further tariff changes or purchasing commitments could improve prospects for US exports. But this may not necessarily alter private processors’ sourcing decisions.

Second, commercial conditions. Crushing margins, soybean prices and demand for meal and oil will determine whether importers can profitably process additional supplies. If livestock demand weakens or inventories remain high, tariff reductions alone may not generate substantially more purchases. Reserve auctions can release existing stocks, but cannot create profitable end demand.

Third, domestic demand and global supply. China’s agriculture ministry forecasts soybean imports of 95.5 million tonnes in 2026-27, compared with 108 million tonnes projected for the same marketing year by the US Department of Agriculture (USDA)’s Beijing office; its estimates are not official USDA figures. The gap highlights uncertainty about future demand, feed use and crushing activity. Brazil’s next harvest will also shape global availability and prices, affecting the relative competitiveness of Brazilian and US supplies.

China’s soybean trade shows how state commitments and market incentives can coexist. Whether US exports recover will depend not only on bilateral agreements, but also on prices, crushing margins and Chinese demand. Beijing’s challenge is to balance diplomatic objectives and food security with the commercial viability of its processing industry.

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