Tariffs, in the way of larger China purchases of US soybeans: market sources

While reports of China's activity in the US soybean market persist, global market participants believe that remaining tariff barriers are limiting more substantial purchases, with Brazil remaining the primary supplier.

According to S&P Global Energy CERA, up to July 20, the USDA had confirmed 1.996 million mt of US soybeans sold to China this year – short of the objective announced by US officials in October: 25 million mt per year until 2028. And unconfirmed trades were heard during the week that began on July 6.

"I now believe buying activity is fully underway," a trader in the FOB Gulf market said. "But tariffs are in the way."

The purchases, along with weather conditions, boosted the Chicago Board of Trade futures on July 20, with August (Q) soybean futures contract up 21.5 cents day over day to 1226 cents/bushel, and November (X) futures increasing 23.25 cents to 1226.25 cents/bu.

However, Chinese traders said that additional Chinese demand for US soybeans is likely to remain limited unless tariffs are reduced, with Chinese tariffs on US soybeans currently sitting at 13%.

"Without tariff relief, demand is mainly coming from state-owned buyers," a Chinese trader said. "While most commercial buyers are unable to purchase US soybeans."

Crop principal analyst at S&P Global Energy CERA Aaron Gerdts said that, while some "expect tariffs to be dropped, it hasn't happened yet."

US President Donald Trump and Chinese President Xi Jinping are reportedly planning a meeting in September, Secretary of State Marco Rubio told reporters on July 19, with sources doubtful about the outcome of the potential summit.

"I have no idea if tariffs will be sorted [during that meeting]," the trader in the FOB Gulf market said.

Nevertheless, even without US soybeans, supply in China is unlikely to become tight over the course of the year, given ample Brazilian supplies.

In addition, demand for Argentine soybeans is likely to emerge, a second Chinese trader said, as Argentine-origin soybeans are cheaper against competing origins.

Platts, part of S&P Global Energy, assessed SOYBEX FOB New Orleans for September shipment at $495.40/metric ton on July 20, and the outright price for CIF New Orleans for July shipment at $494.20/mt. CFR China soybean month-one September shipment was up $7.62/metric ton day over day at $535.54/mt, and FOB Santos for September shipment was at $491.84/mt.

Another Chinese soybean trader said that Brazilian soybeans are expected to remain the preferred origin for Chinese commercial buyers despite a recent increase in US soybean purchases.

"After all, Brazilian soybeans still offer better value than US-origin soybeans," the trader said.

Brazilian basis premiums for CFR China are likely to remain firm, although a further rally in futures could lead to some easing in basis levels, the same trader said, adding that, overall, CFR China flat prices are expected to stay supported.

Buying interest is also likely to be focused on Brazilian new-crop cargoes, supported by more favorable crush margins compared with old-crop soybeans, according to another trader.

Firm overseas demand, along with increasing futures, has boosted Brazilian prices and kept port differentials firm despite a record domestic crop. On July 15, Platts assessed SOYBEX FOB Santos for August loading at $483.66/mt, the highest level for a spot shipment since Dec. 29, 2023. The Brazilian soybean assessment has risen nearly 20% so far in 2026.

"In my view, soybean prices in Brazil should decline," a Brazilian trader said. "There will need to be some adjustments with China buying from the US."

"The winter corn harvest will start coming in soon, so market participants will become more focused on corn. I don't see a reason for soybeans to remain expensive," the source added, also noting that there are still many "question marks" surrounding Brazil's 2026-27 new crop, which will begin to be planted in September.