China braces for soybean supply disruption amid potential US trade war

CHINA – China, the world’s largest soybean importer, is poised to face potential disruptions in its U.S. soybean supply as geopolitical tensions flare ahead of Donald Trump’s inauguration on January 20.

The country, which relies on imports for over 80% of its soybean needs, is anticipating possible repercussions from renewed trade policies under the new administration.

Concerns in the soybean market stem from Donald Trump’s stated commitment to imposing tariffs on imported goods, a hallmark of his earlier presidency.

Proposals for global surcharges of 10% to 20%, and up to 60% on certain Chinese products, have raised fears of a repeat of the 2018-2019 trade war. During that period, China imposed retaliatory tariffs of 25% on U.S. soybeans, leading to a significant decline in U.S. exports to the Asian giant.

In anticipation of potential tariffs, Chinese buyers reportedly stockpiled soybeans in late 2024, following record annual imports of 105 million tonnes, a 6.5% year-on-year increase.

Analysts suggest that Brazil and Argentina, major soybean exporters, stand to benefit again if U.S. exports to China are curtailed. Brazil, in particular, capitalized on the earlier trade war to emerge as China’s leading soybean supplier.

Soybean prices have already shown volatility. In 2024, prices on the Chicago Board of Trade (CBoT) dropped by 22.8%, driven by a bumper U.S. harvest and strong production forecasts from Brazil. Looking ahead, global stocks are expected to remain high, creating downward pressure on prices.

For the year 2025, the importance of global stocks should again be unfavorable for prices according analysts.

Already, demand for soybeans from China is expected to fall this year, due to the weakness of processors’ margins (difference between the purchase price of the raw material and the sale of its derivatives such as oil and meal), which should reduce the country’s purchases overall.

If a new tariff battle ensues, soybean prices may replicate the sharp declines seen during the 2018 trade war, when prices plummeted to their lowest levels since 2009.

However, BMI Research, a Fitch Solutions subsidiary, predicts that China’s subdued demand will cushion some of the tariff-driven price volatility. Regardless, the soybean market faces an uncertain and likely turbulent year.

Sign up to HERE receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.