U.S. Soybean Exports Post-China Trade Truce: Assessing the Limits of Diplomacy in a Saturated Market

The recent U.S.-China trade truce has reignited hopes for American soybean farmers, who once faced a 90% collapse in exports to China during the height of the 2022-2024 trade war, according to a Wisconsin Journal article. A landmark agreement signed in late 2025 pledged China to purchase 12 million metric tons of U.S. soybeans by year-end and 25 million metric tons annually for the next three years, as noted by the Iowa Farm Bureau. However, a closer examination of China's soybean market reveals structural limitations that may render these diplomatic commitments insufficient to revive U.S. export volumes.

China's Soybean Surplus: A Buffer Against New Purchases

According to a report by The Economic Times, China's soybean stockpiles have ballooned to unprecedented levels in 2025, with 10.3 million tons stored at ports and an additional 7.5 million tons held by processors, as noted in an India Times article. This surplus, fueled by record imports from Brazil and Argentina, has created a buffer that diminishes the urgency for Beijing to fulfill its U.S. purchase obligations. State-owned buyer COFCO, the primary channel for U.S. soybean imports, has only secured a handful of shipments, while private importers continue to favor cheaper South American supplies, according to the Business Times report.

The glut is further exacerbated by weak demand from China's processing sector. Crush margins-the difference between soybean input costs and output prices for soybean oil and meal-have remained persistently low, discouraging processors from increasing procurement, as the India Times article noted. Analysts suggest that state firms are likely waiting for market conditions to normalize before committing to large-scale purchases, the Business Times report adds.

South American Pricing: A Structural Headwind

China's reliance on South American soybeans is not merely a short-term preference but a reflection of structural cost advantages. Brazilian and Argentine producers benefit from lower labor and land costs, enabling them to undercut U.S. prices by up to 15%, as the Wisconsin Journal article notes. This pricing gap has persisted even after the trade truce, as U.S. farmers grapple with high production costs and weak crop prices.

Data from The Business Times highlights that China's soybean imports from South America accounted for over 70% of its total imports in 2025, as the Business Times report states. The U.S. share, by contrast, is projected to fall to 32% of its 2024 level, despite the 12-million-ton commitment, according to the Wisconsin Journal article. This trend underscores a critical reality: diplomatic agreements cannot override economic fundamentals when alternative suppliers offer superior value.

Weak Processing Margins and Procurement Delays

The Chinese soybean processing sector's financial health is a key constraint on demand. As stated by The Milwaukee Journal Sentinel, weak crush margins have led to operational cutbacks and delayed procurement decisions, according to the Wisconsin Journal article. This hesitancy is compounded by uncertainty over global soybean prices and domestic demand for soybean meal, which is used in livestock feed.

COFCO's limited activity in the U.S. market-despite its role as a state-owned buyer-further illustrates the sector's reluctance to commit capital, as the India Times article notes. Private importers, meanwhile, are prioritizing cost efficiency over geopolitical considerations, sourcing 80% of their soybeans from South America, according to the Business Times report.

U.S. Export Projections: A Mixed Outlook

While the 25-million-ton annual commitment aligns with pre-pandemic trade volumes, it falls short of the 26.8-million-ton peak in 2024, according to the Wisconsin Journal article. This gap highlights the challenge of restoring U.S. soybean exports to previous levels, even with a trade agreement in place. Structural issues such as high production costs, inconsistent trade policies, and competition from South American suppliers continue to weigh on the sector, as the Wisconsin Journal article notes.

The trade truce has also brought broader relief to U.S. agricultural exports, with tariffs on beef, pork, and dairy lifted, as noted in a Drovers report. However, these benefits may not offset the persistent underperformance of the soybean market, which remains a critical revenue source for Midwest farmers.

Investment Implications

For investors, the U.S. soybean sector presents a paradox: diplomatic progress has stabilized trade relations, but it has not resolved the underlying economic challenges. Soybean-linked agricultural assets, including farmland and agribusiness stocks, face headwinds from weak demand, pricing pressures, and geopolitical volatility. While the 25-million-ton annual commitment offers a floor for exports, it is unlikely to drive the growth needed to justify aggressive investments.

Structural reforms-such as cost-reduction strategies or diversification into higher-margin crops-will be essential for U.S. farmers to remain competitive. Until then, the viability of soybean exports will remain tethered to China's stockpile dynamics and the pricing discipline of South American rivals.