China, the world’s biggest soybean importer, is likely to import record volumes of soybeans in July. This is driven by lower prices and the prospect of former U.S. President Donald Trump returning to power and reigniting trade tensions between Beijing and Washington, which was once China’s top supplier of the oilseed.
Traders and analysts have said that Chinese soybean importers have been booking higher volumes in recent weeks, as they try to protect themselves from a possible increase in U.S. tariffs if there is a trade war after the upcoming U.S. elections.
However, the impact of any trade escalation is likely to be muted for Chinese soybean buyers, given the significant decline in market share for U.S. beans that was triggered during Trump’s presidency.
The Trump administration’s tariffs on Chinese goods provoked retaliation from Beijing, including a 25% duty on U.S. beans. This forced oilseed processors to seek alternative South American cargoes, slashing U.S. soybean exports to China from 32.9 million metric tons in 2017 to just 16.6 million metric tons in 2018.
While the U.S. and China signed a deal in January 2020 in which Beijing committed to buying more U.S. agricultural products, including soybeans, the U.S. has ceded market share as ample supplies of cheaper Brazilian beans became entrenched in China. Last year, Brazil accounted for 70% of China’s soybean imports, while the U.S. share was just 24%, even though U.S. beans are no longer subject to additional duty.