Insight Focus
Soybean prices have been recently bullish. The continued conflict in the Hormuz has pushed up oil prices, increasing demand for soybean oil, which can serve as a substitute for petroleum-based fuel. Not only this, but China’s purchases of US soybeans are in full swing – despite government buyers paying a premium over Brazilian beans and sluggish domestic demand for meat.
Soybeans in Hormuz Crossfire
Soybeans followed grain prices upward during July, even though soybeans were not directly impacted by the bullish factors that impacted the rest of the grains complex. These included hot weather in the US Midwest and in Europe, flooding in China, heavy rains in Argentina, disruption of Black Sea shipping and prospects for El Nino weather anomalies.
Soybeans were directly exposed to only one bullish factor—new disruptions to shipping in the Hormuz Strait impacting soybean oil due to its role as a substitute for petroleum-based fuel.
Meanwhile, Chinese customs data reveals that soybeans from Brazil’s record harvest are arriving in China at brisk pace, while a dribble of shipments from the US reflects China’s fulfilment of its October 2025 purchase commitment. Chinese buyers have begun purchases of beans from the upcoming US crop to fulfil the 2026 purchase commitment, a bullish factor for US prices.
During June 2026, China imported 13.55 million tonnes of soybeans, the second-largest monthly total ever. China imported 50.15 million tonnes in the first six months of 2026, slightly ahead of the 49.4 million tonnes imported a year earlier.
Source: China General Administration of Customs
Brazil was the dominant supplier, accounting for 12.08 million tonnes of China’s June imports. The US supplied 1.27 million tonnes, and Russia supplied 124,700 tonnes. Smaller amounts arrived from Canada, Ukraine, Benin and Ethiopia.
Strong Livestock Activity Buoys Soy Crushing
China’s imports from Brazil have been rising month by month since March, reflecting the arrival of beans from Brazil’s new harvest. China imported a cumulative 28.2 million tonnes from Brazil during March-June. Customs clearance of some Brazilian soybeans may have been delayed until June by tightened inspections due to concerns about foreign material. Those concerns and inspection delays have reportedly been resolved.
Judging from the pace of shipments reported by Brazilian customs data, arrivals in China of Brazilian beans may slow moderately during July and August. According to Brazilian export data, exported soybeans bound for China rose from just 1 million tonnes in January to a peak of 11.53 million tonnes in April, roughly corresponding to the surge in June arrivals reported by China’s customs data.
Brazilian data show that exports bound for China slowed to 10.5 million tonnes in May and 10.3 million tonnes in June. Market news reports from China confirm that Brazilian beans are still arriving at a brisk pace during July. Crushers are operating at a high level of capacity utilization to prevent soybean inventories from building.
Source: Brazil and China customs data
China’s production of soybean meal was matched by a robust livestock sector. During the first half of 2026, China’s meat production was up 4.3% year-over-year, and feed production was up 3.9%. However, the supply of meat outpaced demand.
Hog prices were down 25-to-30% year-over-year, and hog and poultry producers reported financial losses. The inventory of productive sows at the end of June was down 6.5% year-over-year, signalling the prospect of a contraction in the second half of 2026. While soybean meal prices weakened as meal production grew, crush margins were supported by stronger soybean oil prices.
US Soybeans Come at Premium
China’s imports of US soybeans during June 2026 reflect purchases by state-owned companies to fulfil China’s October 2025 commitment to purchase 12 million tonnes of US soybeans. USDA export inspections indicate that cumulative shipments to China since December 2025 reached 12.2 million tonnes by July, exceeding the purchase commitment.
A cumulative total of 9.3 million tonnes of US soybeans had arrived in China as of June, suggesting that 2.9 million tonnes of US soybeans from the 2025/26 marketing year are in transit to China or in customs clearance.
Chinese buyers have paid premiums for US soybeans over Brazilian soybeans. A comparison of the unit cost of China’s imported soybeans from Brazil and the US shows that costs of US and Brazilian beans were near parity in February, but the cost of Brazilian beans dropped from February to May while the cost of US beans was steady. The spread between costs of US and Brazilian beans grew to USD 30/tonne for shipments arriving in May, then shrank to USD 20/tonne in June.
Source: China customs data
The premiums correspond to the spread between US and Brazilian export quotes that persisted between January and early May 2026. The high prices of US soybeans discouraged private sector buyers from importing US soybeans, so state-owned companies were the only purchasers of US soybeans.
The premium narrowed after no expansion of China’s soybean purchase commitment came out of the May US-China summit. The annual purchase commitment of 25 million tonnes made in October 2025 will apply for 2026.
Source: USDA; Brazil CEPEA
China Buying Supports US Soybeans
During July Chinese buyers resumed large-scale purchases of new crop US soybeans. USDA reports of cumulative export sales for the 2026/27 market year hit 1 million tonnes in late May and 2.8 million tonnes by the end of June. Total cumulative sales rose to 6.3 million tonnes by July 23, more than double the year-earlier total when no sales to China had been made.
Source: USDA
China’s return to the US market made a substantial difference from a year earlier. China and “unknown destinations” (which may also include Chinese buyers) accounted for over 5 million tonnes of total outstanding sales by July 23. Mexico was the third-leading destination with 851,000 tonnes. Smaller amounts were sold to Japan, Colombia, Costa Rica, Egypt, Indonesia, Taiwan, Malaysia and Taiwan.
A year earlier, in July 2025, there had been no sales to China, and fewer than 1 million tonnes had been sold to unknown destinations. On the other hand, several countries cut back on purchases in 2026. Sales to Mexico were down 150,000 tonnes from a year earlier. Pakistan, Bangladesh, Italy, and Vietnam have not yet bought any US soybeans as of July 23, but they had purchased a combined 540,000 tonnes a year earlier.
Source: USDA
With a large US soybean crop on the horizon, the prospects for another US-China summit in September is becoming another focus of attention. A September meeting could trigger China’s removal of a 10% tariff on US products and stimulate commercial purchases by private sector buyers in China. A delay of the meeting, however, during the peak of the US marketing season would add uncertainty to demand for the 2026/27 US crop.
