US drought and China’s aggressive buying are pushing up soybean prices

In mid-July 2026, US soybean futures prices reached new highs since May. The main drivers of growth were low domestic inventories, a weather risk premium due to drought in the Midwest, and active buying by China, according to SunSirs.

The July USDA report supported the market. The forecast for ending soybean stocks for both the old and new crops was lowered to 310 million bushels, below market expectations. Global stocks also fell to 124.17 million tonnes.

The critical soybean flowering phase in the US is taking place amid abnormal heat and drought (especially in Nebraska and South Dakota). Crop condition is estimated at 65% (versus 70% a year earlier) and could worsen to 62-63%, increasing the “weather risk premium” in futures prices.

Since the beginning of July, the USDA has confirmed sales of over 1 million tonnes of U.S. soybeans to China, improving the U.S. export forecast for the new marketing year.

Despite the short-term upward trend, long-term soybean price growth is limited by two main factors. A record Brazilian soybean harvest (180 million tonnes) makes it more profitable for China. Brazilian CNF costs are 50-60 cents per bushel lower than U.S. soybeans, providing positive margins for processors. Meanwhile, U.S. soybean shipment rates remain at their lowest since the 2012/2013 marketing year, lagging behind South American suppliers.

Tags: USA, China, prices, soybean