US soybean shipments to China have been falling for a number of years as Brazil solidifies its hold on the largest oilseed market in the world. However, in 2024, a glut of supply from Argentina will increase competitiveness and pose a further danger to US soybean exports to China.

As a result of Brazil and Argentina's soaring soybean production meeting rising Chinese demand, the United States accounted for less than 25% of China's imports of soybeans last year compared to 51% in 2009. This information is based on data from the United Nations Commodity Trade Statistics Database.

"There will be more competition this year as a result of the large supply of soybeans coming from Argentina," remarked a dealer in Singapore for a multinational corporation that has oilseed processing facilities in China.

“U.S. share is already declining. This year, they will suffer more losses to Argentina.

The decline in American soybean exports to China may put further pressure on Chicago Board of Trade soybean futures Sv1, which fell over 10% in 2024 after losing roughly 15% the previous year.
China is the primary importer of soybeans, which are ground into a protein-rich meal for animal fattening as well as oil for cooking and other uses. In 15 years, China's imports of soybeans have almost doubled to 99.41 million metric tons, valued at $60 billion, in 2023.

According to an oilseed dealer at a state-owned trading company in Beijing, "Argentina's production has increased this year, while Brazil's output has slightly decreased." "During the fourth quarter, some U.S. beans are probably going to be replaced with Argentine beans."

Large crops at competitive pricing
Argentina, the third-largest producer of soybeans after Brazil and the US, is expected to yield almost 50 million metric tons in 2024, more than twice as much as 21 million tons the year before, when the crop was nearly destroyed by a catastrophic drought.

Traders noted that even if Brazil's output is predicted to fall this year, the agricultural superpower would have enough supply to meet demand from its largest client.

Conab, the Brazilian crop agency, said that the nation's soybean production in the 2023–2024 cycle was 146.522 million metric tons, 5.2% less than the previous year.

According to traders, Latin American exporters are gaining a larger proportion of China's soybean market due to their competitive prices; nevertheless, Beijing-Washington rivalry is also a contributing element.

Brazilian soybeans were priced at a premium of $1.30 per bushel over November Chicago Board of Trade contract SX24, while U.S. beans were valued at $2.30. Argentina is offering its June shipment at a premium of $1.45 over July SN24.

China's imports of soybeans from the US decreased by half in March compared to the same month last year.

A second trader with a privately held trading company in Singapore stated, "We have reduced our soybean imports from the U.S. this year," citing less expensive Brazilian beans. "It has actually been fairly drastic; we haven't bought many beans from the United States."

Some Chinese customers are also increasing their purchases of cargoes from Argentina and Brazil in anticipation of the approaching U.S. presidential election, which will reduce supply interruption threats.

“U.S. market share will keep decreasing due of the political environment surrounding the elections, according to a trader with an international trading company based in Shanghai.

"The U.S.-China relationship will suffer if Trump wins. Many crushers are worried about potential limits on the importation of beans from the United States.

China increased its imports of soybeans from Brazil and Argentina during the trade battle led by President Donald Trump in an effort to lessen its reliance on American soybeans and lessen the impact of rising tariffs.

China, which purchases more than 60% of the soybeans sold globally, is predicted to acquire 100 million tons of the oilseed in 2024, much like it did the previous year, as it builds up stockpiles and takes advantage of lower prices despite a decline in demand from the animal feed industry, according to traders.

Growers in the United States are bracing themselves for record-breaking yields from Latin America.

According to Illinois, the leading producer state, soybean farmer Jeff O'Connor, the U.S. sector is expanding into additional markets like Southeast Asia and is counting on increased domestic demand for creating sustainable fuels.

"We cannot make up for what we are losing to China on the international stage within the next year on the home front. We can't replace that right away," he remarked.

Source: (Reuters)