Hopes of a dramatic increase in US soybean exports to China have been dashed, with Commerzbank AG calling a quadrupling of deliveries “completely unrealistic.”
Soybean prices surpassed $10 per bushel on Monday, following remarks from US President Donald Trump.
He expressed optimism that China would soon increase its soybean purchases from the US by fourfold.
Trump defended this stance by citing China’s alleged concern regarding a potential shortage of soybeans.
Furthermore, he argued that these substantial purchases would contribute significantly to ameliorating China’s considerable trade deficit with the United States.
This perspective was a key component of the administration’s broader trade strategy, aiming to rebalance economic relations between the two global powers.
Trump’s wishful thinking?
The emphasis on agricultural products like soybeans highlighted a specific sector where the US believed it held a competitive advantage and could leverage its production capacity to address trade imbalances.
“This is more likely to have been wishful thinking than a realistic assessment,” Carsten Fritsch, commodity analyst at Commerzbank AG, said in a note.
China has an ample supply of soybeans and does not require substantial increases in purchases from the US, Fritsch added.
China’s projected import demand of 112 million tons for the 2025-26 crop year could theoretically be met entirely by imports from Brazil, according to US Department of Agriculture forecasts.
During Trump’s first term, the tariff dispute led China to decrease its soybean imports from the US and substantially increase them from Brazil in 2018-19.
China imported approximately 22 million tons of soybeans from the US and nearly 75 million tons from Brazil last year, based on customs data.
In 2017, prior to the tariff dispute, the ratio stood at 33 million versus 51 million tons.
Although the Phase 1 agreement in 2021 aimed for increased Chinese purchases of US soybeans, resulting in a similar split of 33 million versus 58 million tons, these targets were largely unmet, according to Commerzbank.
Supply dynamics
“A quadrupling of China’s soybean purchases from the US, as desired by Trump, would reverse the current ratio, making the US China’s dominant soybean supplier,” Fritsch said.
A look at the figures shows that this is impossible.
The US Department of Agriculture (USDA) has released its projections for the 2025-26 soybean season, anticipating a robust harvest of 118 million tons.
This significant output, combined with an existing stock of 9.5 million tons, indicates a substantial supply of soybeans for the upcoming marketing year.
These figures are crucial for global commodity markets, as the US is a major producer and exporter of soybeans.
The USDA’s estimates often influence futures prices, trade policies, and agricultural planning worldwide.
The USDA estimates domestic demand to be 72 million tons.
The US would therefore face a severe domestic shortage if it were to supply China with four times the previous year’s soybean volume, which was 20 million tons, according to Fritsch.
Filling the resulting gap with imports from Brazil is also impractical given the current tariff rate of 50%.
The post Commerzbank debunks Trump’s quadrupled soybean export hopes appeared first on Invezz
