USDA FAS predicts further decline in demand for US soybeans from China

In the midst of the trade war with the United States, China is developing a special program for supplying soybeans from Brazil, "Soy China", which takes into account Chinese standards of sustainability and product quality. It provides for an exclusive model of soybean production that meets Chinese import standards, in particular environmental and social criteria. Its creation was inspired by the "Boi China" system, within the framework of which Brazil grows beef in accordance with Chinese standards.

 

In 2024, almost 71% of China's imported soybeans were purchased from Brazil, and this share would increase if Brazil were to grow varieties adapted to Chinese standards.

 

The “Soy China” initiative signals an effort to align Brazil’s export strategy with the needs of China’s agricultural sector. Brazil already considers China a priority buyer of its soybeans, and the new initiative could institutionalize soybean production exclusively for China, which is seeking to expand its influence in South American agricultural markets.

 

Chinese importers have already contracted 8 million tons of soybeans in South America for delivery in September, which is putting pressure on the US market amid the loss of the Chinese market.

 

According to the USDA FAS forecast, soybean imports to China in 2024/25 MY will be lower than the record 2023/24 MY (112.2 million tons). And soybean production in 2025/26 MY will decrease compared to the previous season to 19.8 million tons due to a sharp decrease in soybean prices for Chinese farmers. At the same time, soybean consumption in 2025/26 MY will increase compared to the previous season from 122 to 124.4 million tons. Overall, over the past 20 years, soybean demand in China has grown by an average of 4.6 million tons per year, but this trend may stop against the background of certain market and policy factors, in particular, the slowdown in the economy and government measures to reduce demand for soybean meal.

 

It is expected that in the 2025/26 MY, the volume of soybean processing in the PRC will increase by 2% compared to the previous season to 101 million tons due to the gradual recovery of demand for feed, and soybean consumption in food will reach 17.5 million tons. Imports will grow by 1.9% to 106 million tons, but will begin to decline further due to reduced demand for soybean meal.

 

According to the report "China's Agricultural Prospects for 2025-2034" released in April, China expects crop output to reach 753 million tons by 2034, the sowing area to reach 119 million hectares, and the yield to increase by 7.8% to 6.3 tons/hectare thanks to the use of high-yielding and stress-resistant varieties and the promotion of new technologies. Over the next 10 years, soybean imports will decrease to 79.03 million tons as the yield increases to 2.78 tons/hectare and production will increase by an average of 5.3% per year.

 

Imports of wheat and corn will also decline, with total grain imports falling to 113 million tonnes by 2034, an average annual decline of 3.1%. According to the report, trade is expected to undergo structural changes, including improved diversification of import sources.