Dive Brief:
- China made its first purchase of U.S. soybeans for the current crop season, marking a delayed start to sales as the world's top grain importer continues its reliance on cheap commodities from Brazil.
- The country booked 132,000 metric tons of U.S. soybeans during the 2024-2025 marketing year, the Agriculture Department said last week. By comparison, China made its first U.S. soybean purchase for last year's marketing season in January 2023.
- China has shunned U.S. soybeans in recent months and accelerated purchases from South America, where robust harvests and the devaluation of Brazil's currency have kept prices low.
Dive Insight:
Robust supply and declining prices have made U.S. soybeans more attractive to global buyers, though sales are expected to remain under pressure after this year's harvest due to increased competition with South America.
Supplies from a bumper harvest in South America are expected to carry over into the traditional U.S. fall shipping window, a similar dynamic to what played out last year. This year, the devaluation of Brazil's real has also encouraged farmers to accelerate exports at lower prices.
As a result, China has stepped up its purchases from Brazil and Argentina over the past few months while U.S. purchases have slowed. For the period between last August and June 2024, U.S. soybean exports to China dropped more than 20%.
With lower global prices, U.S. exporters have seen some momentum in soybean meal sales. Mexico's imports are set to reach the second highest total ever this season after sales declined to a nine-year low in the 2022-2023 marketing year.
While Argentina is the largest exporter of soybean meal, commonly used in animal feed, destructive drought in the country will likely give U.S. exporters an edge.
However, global prices are forecast to remain competitive post harvest, due in part to bumper crops from Brazil. The USDA projects the U.S. season-average farm price for soybeans to be down 10 cents to $11.10 per bushel.
"Over the next few months, the market’s attention will likely turn away from South America and toward U.S. harvest progress and crop size," the USDA said in its outlook. "With highly competitive Brazil prices, another year of abundant Brazil carryout, and new record production prospects for the Southern Hemisphere in 2024/25, U.S. soybean exports may continue to experience greater competition after harvest.”
