China's major ports are currently overflowing with massive soybean reserves following months of record imports, creating significant challenges for American exporters despite recent trade understanding between Presidents Trump and Xi Jinping that included fresh purchase commitments from Beijing.
Trade Deal Promises Clash With Market Reality
After the high-profile meeting between Donald Trump and Xi Jinping last month, US officials announced that China had committed to purchasing 12 million tonnes of soybeans before year-end and an additional 25 million tonnes annually for the next three years. However, Beijing has notably refrained from publicly confirming these specific figures, creating uncertainty in agricultural markets.
While retaliatory tariffs on US imports were suspended as part of the trade understanding, state-owned trading giant COFCO has so far booked only minimal cargoes for December and January loading, according to multiple market participants familiar with the situation.
Record Stocks and Crushing Margins Pressure Market
China's aggressive early-year buying spree from South America, driven by concerns that the trade conflict might prolong, has resulted in unusually large inventory accumulations. Data from Sublime China Information reveals that port stocks reached a record 10.3 million tonnes as of November 7, representing a substantial increase of 3.6 million tonnes compared to the same period last year.
The oversupply situation extends beyond port facilities. Crushers, companies that process soybeans into oil and animal feed, are holding approximately 7.5 million tonnes of inventory, marking their highest stock levels since 2017 according to industry reports.
This supply glut has exerted heavy downward pressure on prices across the soybean product chain. Soymeal, which is crucial for feeding China's massive pig population, has declined by more than 20% since April, currently trading around 3,000 yuan ($421) per tonne in key coastal regions including Tianjin, Shandong, Jiangsu and Guangdong based on Mysteel data.
The profitability crisis in China's crushing industry continues to deepen. Processing margins have remained negative since mid-year, with current losses averaging around 190 yuan per tonne in the critical processing hub of Rizhao. Market analysts project little improvement in these conditions before March next year.
Brazilian Advantage and Purchase Delays
Johnny Xiang, founder of Beijing-based AgRadar Consulting, explained the current market dynamics: "State firms may be waiting for processing margins to recover before making large-scale purchases. Even with tariff waivers in place, margins remain negative and Brazilian beans continue to offer better pricing."
Private importers are actively favoring Brazilian supplies due to significant cost advantages. January shipment cargoes from Brazil are currently quoted at approximately $480 per tonne including freight, compared with $540–$550 for equivalent US shipments. December bookings from Brazil already total roughly 2 million tonnes, covering more than 40% of China's anticipated monthly demand.
Traders estimate that China's state stockpiles currently stand between 40 million and 45 million tonnes, roughly double last year's imports from the United States and sufficient to satisfy approximately five months of early-year consumption requirements.
Arlan Suderman, chief commodities economist at StoneX, highlighted the concerning gap between political announcements and market reality in a recent briefing: "There's very little indication that state buyers are engaged in a programme to purchase 12 million metric tons ahead of the end of this year, let alone 25 million tons more for calendar year 2026."
The United States administration appears determined to hold China accountable to its reported commitments. A US official told Reuters that "the administration expects our trading partners to adhere to their deal commitments" and noted that President Trump reserves the right to adjust tariff rates and export controls to ensure compliance.
This standoff between diplomatic promises and market fundamentals creates significant uncertainty for global agricultural trade flows as 2023 approaches its conclusion.
