Soybeans: China’s Fixed U.S. Commitments Cap Upside as Brazil Dominates

China’s confirmed 25 MMT annual U.S. soybean purchase pledge removes hopes for extra trade‑driven demand, keeping futures capped while Brazilian supply and soft Chinese feed demand continue to pressure prices. Soybean markets are recalibrating after U.S. Treasury Secretary Scott Bessent stated on May 14 that existing Chinese purchase commitments already fully cover soybeans under current trade arrangements and that no additional buying is expected from the Trump–Xi summit in Beijing. With China structurally reliant on competitively priced Brazilian beans and domestic demand still subdued, the Busan agreement acts more as a floor under U.S. export volumes than a fresh bullish catalyst. Nearby CBOT futures have softened this week amid planting progress and heavy South American flows, while physical offers show modest week‑on‑week declines in several origins when converted to EUR terms. Traders now focus on the monthly pace of Chinese buying and whether commercial behavior truly aligns with the diplomatic pledge through the 2026 marketing year.

Prices & Spreads

Recent CBOT soybean futures have traded lower as selling followed earlier trade‑driven rallies, with May 2026 contracts around the mid‑EUR 420–430/t equivalent range after recent weakness.

Physical offers in key FOB hubs, converted approximately to EUR/kg, underline continued competitive pressure from South America and the Black Sea. Chinese yellow soybeans are offered around EUR 0.65–0.72/kg, U.S. No. 2 at roughly EUR 0.56–0.58/kg, Indian beans near EUR 0.82/kg and Ukrainian origin close to EUR 0.31–0.32/kg, all slightly below or flat to recent weeks depending on origin.

Supply & Demand Balance

Soybeans remain the largest single U.S. agricultural export to China, but China’s reliance on U.S. origin has dropped sharply: from 41% of its imports in 2016 to about 20% by 2024, and just 15% last year. Structurally cheaper Brazilian supplies and weaker Chinese feed demand—especially in the hog sector—have driven this shift.

Brazil’s dominance is reinforced by record exports this year. April 2026 shipments reached roughly 16.8 MMT, with about 11.6 MMT (69%) going to China, confirming that Brazilian beans remain China’s first choice on price and availability. At the same time, combined U.S. and Brazilian exports to China in January–April rose about 10% year‑on‑year to a record 37 MMT, underscoring that China’s total import demand is robust even as its origin mix disfavors the U.S.

Policy Drivers & Market Sentiment

The Busan agreement of October 2025 obliges China to import 25 MMT of U.S. soybeans annually through 2028. According to Bessent’s May 14 remarks, these existing commitments fully cover soybeans under the current U.S.–China trade framework, and no additional volumes are expected from the latest Trump–Xi talks in Beijing.

This 25 MMT target would mark the highest Chinese intake of U.S. beans since 2022, effectively providing a medium‑term floor for U.S. exports. However, it does not reverse China’s structural diversification toward Brazil and Argentina. Markets are now focused less on whether the commitment will rise and more on the timing and phasing of purchases across the marketing year, especially given that commercial Chinese buyers still prioritize price and logistics over diplomatic optics.

Speculative sentiment has cooled after earlier hopes for fresh Chinese buying. Open interest in CBOT soybeans has climbed this week even as prices eased, suggesting new short positioning or hedging activity as traders lean into comfortable global supply and the absence of a new policy‑driven demand shock.

Weather & Production Outlook

Weather in key producing regions currently supports the bearish tilt. In the U.S., planting is progressing well under mostly favorable Midwest conditions, while Brazil is shipping a large crop harvested under broadly benign weather earlier in the year, contributing to record export volumes.

USDA’s latest oilseeds reports point to comfortable global soybean supplies for 2025/26, with only modest tightening risks at the margin. Combined with strong South American carry‑out, weather‑related price spikes would likely require a pronounced U.S. yield shock later in the season rather than incremental changes in Chinese buying behavior.

Trading & Procurement Outlook

• Producers (U.S. / Brazil): Use current futures weakness to layer in modest hedges for new‑crop sales, but avoid over‑hedging given that any U.S. weather scare or execution delays on Busan shipments could trigger short‑covering rallies.
• Chinese crushers & Asian importers: Continue to prioritize Brazilian and Black Sea origins where spreads justify freight, but keep optionality on U.S. cargoes in case basis weakens further as traders price in the lack of extra Chinese commitments.
• European buyers: With Ukrainian and U.S. offers comparatively cheap in EUR terms, consider extending coverage modestly for Q3–Q4 while leaving some open tonnage to benefit from any further downside if South American exports stay heavy.
• Speculators: Bias remains mildly bearish to range‑bound; strategies favor selling rallies toward recent highs rather than chasing prices lower, with close monitoring of Chinese monthly import data and U.S. weather as main risk triggers.

3‑Day Directional View (EUR terms)

• CBOT futures (EUR/t equivalent): Slight downside to sideways as markets digest Bessent’s comments and strong Brazilian export flow.
• FOB U.S. Gulf: Stable to marginally softer; basis could ease if Gulf exporters struggle to allocate volumes quickly into the Busan program.
• FOB Brazil & Black Sea: Sideways; logistics remain busy but well‑functioning, keeping competitive pressure on U.S. and Asian origins in the near term.