There’s still ‘no evidence’ China is buying all the U.S. soybeans it promised under Trump’s trade deal amid oversupply from South America

China is reportedly not fulfilling its commitment to purchase 12 million metric tons of U.S. soybeans by year-end, a key component of a recent trade agreement. This non-compliance is primarily due to China's current oversupply of cheaper South American soybeans, which has driven down domestic prices by over 20% and removed financial incentives for private Chinese buyers. StoneX's Arlan Suderman confirms a lack of evidence for substantial state-backed purchases to meet this quota. The failure risks reigniting U.S.-China trade tensions, with the U.S. prepared to adjust tariffs, despite China's apparent compliance with other deal aspects like fentanyl component export curbs, and the window for significant U.S. soybean purchases is rapidly closing as cheaper Brazilian supplies are already booked.

Analysis

China is currently failing to meet its committed U.S. soybean purchase targets, specifically the 12 million metric tons by year-end 2025, as outlined in a recent trade agreement. This non-compliance is largely driven by China's significant oversupply of cheaper South American soybeans, which has caused domestic prices to fall over 20% from April peaks, removing any financial incentive for private Chinese buyers.

StoneX's chief commodities economist, Arlan Suderman, notes a lack of evidence for substantial state-backed purchases required to fulfill the 2025 quota, despite Chinese processors having already acquired approximately 40 million tons from South America. Private importers continue to book Brazilian soybean shipments for next month, further solidifying the market's preference for non-U.S. sources.

This failure risks reigniting the U.S.-China trade war, with U.S. officials warning of potential tariff adjustments to ensure compliance. While China has adhered to other deal components, such as fentanyl component export curbs, the window for meaningful U.S. soybean purchases is rapidly closing as new, cheaper Brazilian supplies are already scheduled to arrive in February.

Key Decisions for Investors

• Investors should closely monitor U.S.-China trade relations for potential escalation of tensions and the reintroduction of tariffs, which could impact agricultural commodity prices and related industries.
• Evaluate current portfolio exposure to U.S. agricultural commodities, particularly soybeans, given the sustained lack of Chinese demand and global oversupply from South American sources.
• Consider the implications for companies with significant supply chain exposure to U.S. agricultural exports or those sensitive to shifts in U.S.-China trade policy, as increased volatility is likely.