Will China really buy 12 million tonnes of U.S. soybeans?

There are still plenty of questions swirling around about demand for U.S. soybeans, says an analyst.

There was elation when U.S. president Donald Trump’s administration announced on Nov. 1 that China had agreed to buy 12 million tonnes of U.S. soybeans by the end of 2025 and 25 million tonnes annually for the next three years.

Why it Matters: Soybean and other oilseed prices could drop if China doesn’t live up to its trade deal with the U.S.

However, weeks later there has been no official confirmation of those numbers from China.

“They refused to acknowledge the demand numbers that the Trump administration has made public,” Arlan Suderman, chief commodities economist with StoneX Financial, said during a recent webinar.

He thinks the Trump administration made the numbers public to pressure China to live up to them.

“But China is still not showing any indications it plans to do so,” said Suderman.

The U.S. Department of Agriculture just did a big data dump about exports to catch up for all the time the government was shut down.

It shows that China likely purchased about 24 million bushels of U.S. soybeans in the past six weeks, which is about 5.5 per cent of the supposed 12 million tonne commitment.

“I think the market is starting to get skeptical,” he said.

U.S. soybeans still face a 13 per cent import tariff in China. That compares to three per cent for Brazil, Argentina and other exporters.

That 10 per cent difference adds $1.38 per bu. to U.S. soybeans, which are already priced $0.30 per bu. higher than Brazilian beans.

“Private crushers (in China) have zero financial incentive to buy U.S. soybeans, and very soon they’ll have access to new crop Brazilian soybeans that will be even cheaper,” said Suderman.

That means it is up to China’s state grain buyer, Sinograin, to import 12 million tonnes before the end of the year, and there are no signs it is doing so.

Suderman’s growing skepticism about the China trade deal is causing him to increase his U.S. soybean ending stocks number above 300 million bu. instead of the 274 million bu. he was using after the deal was announced.

There is also considerable demand uncertainty on the home front.

The U.S. biofuel industry is still awaiting final rulings and clarifications on important policy issues such as renewable volume obligations, small refinery exemptions and the 45Z tax credit.

Market turmoil has become one of the trademarks of Trump’s administration.

“That constant policy change fuels uncertainty and he believes gives him an edge in negotiation,” said Suderman.

“But there’s unintended consequences.”

American businesses are holding back on expansion and hiring, while consumers are pausing major purchases.

He believes Trump’s success hinges on how his party performs in next year’s midterm elections.

“If he maintains this uncertainty, history would argue that he loses Congress, and if he loses Congress he could very well be impeached,” said Suderman.

He believes the U.S. economy could really take off next year if Trump stops his incessant policy tinkering.

The U.S. Supreme Court is set to rule on the legality of Trump’s reciprocal tariffs by the end of 2025.

Suderman thinks there is about a 33 per cent chance he wins that case.

If Trump loses the case, then China could be emboldened to ignore the terms of the recently signed trade pact.

Tags: Brazil, soybeans, U.S., Argentina, demand, China, exports