U.S. Soybean Market Vulnerability Amid Stalled Chinese Demand and Record Supplies

The U.S. soybean market is facing a perfect storm of structural oversupply, geopolitical headwinds, and eroding demand from China, its largest trading partner. As of July 24, 2025, U.S. soybean exporters had sold just over 3 million metric tons for the 2025/26 marketing year—a 20-year low and a 12% year-over-year decline [1]. This collapse in export sales is driven by China’s unprecedented absence from the U.S. market, with no purchases made in 2025, marking the slowest market entry since at least 1999 [1]. Meanwhile, Brazil and Argentina have seized the opportunity, shipping record volumes to China during the critical August–December period [1].

The implications for U.S. farmers are dire. Cash prices in the Northern Plains have plummeted below $9 per bushel, with some locations reporting prices near or below $8—a level that fails to cover production costs [4]. The U.S. 2025/26 soybean supply forecast has been reduced by 63 million bushels due to lower carryover and production, now estimated at 4.3 billion bushels [1]. This oversupply, combined with China’s shift to cheaper South American supplies, has created a bearish outlook. By October 2025, Chinese buyers had secured 4 million tons of soybeans from Argentina and Uruguay, half of their expected quarterly requirement [5]. For context, China’s Q3 2025 soybean purchases are projected to reach 12 million tonnes, all sourced from South America [3].

The U.S. is not standing idle. Initiatives like the Soy Connext convention, organized by the U.S. Soybean Export Council (USSEC), aim to diversify markets by engaging 34 international trade teams across 17 U.S. states [1]. However, these efforts face an uphill battle. Brazil’s soybean production in 2024/25 is projected to outpace the U.S. by 42%, and its competitive pricing has captured 71% of China’s soybean imports by Q2 2025 [3]. Additionally, U.S. soybeans face a 34% tariff in China, rendering them uncompetitive against South American alternatives [1].

For agricultural commodity investors, the strategic risks are multifaceted. Geopolitical tensions between the U.S. and China remain a wildcard, with retaliatory tariffs and trade negotiations shaping market access. Brazil’s dominance in soybean production and logistics further tilts the playing field. Price volatility is another concern: soybean futures have dropped below $10 per bushel, and technical indicators like the death cross signal prolonged bearish trends [2]. Farmers’ annualized losses now exceed $9.4 billion, compounding financial stress [1].

Investors must also consider the ripple effects of China’s domestic policies. High soymeal inventories and storage constraints have pushed Chinese feed producers to seek cheaper imports, accelerating the shift away from U.S. supplies [1]. While the U.S. explores niche markets and value-added processing, these strategies are unlikely to offset the scale of China’s withdrawal [5].

In conclusion, the U.S. soybean market is at a crossroads. Structural oversupply, geopolitical fragility, and Brazil’s competitive edge create a high-risk environment for investors. Monitoring trade negotiations, Brazil’s production trends, and U.S. policy responses will be critical. For now, the market remains in a precarious equilibrium—one that could tip further if China’s demand does not rebound or if Brazil’s dominance solidifies.

Source:
[1] New-Crop US Soybean Export Sales at 20-Year Low [https://farmpolicynews.illinois.edu/2025/08/new-crop-soybean-export-sales-at-20-year-low/]
[2] Assessing Soybean Market Volatility Amid Robust Crop [https://www.ainvest.com/news/assessing-soybean-market-volatility-robust-crop-tour-pod-counts-uncertain-china-demand-2508/]
[3] The Diverging Fates of U.S. Soybeans and Corn in a China-Driven Market [https://www.ainvest.com/news/diverging-fates-soybeans-corn-china-driven-market-2508/]
[4] China Remains Absent from US Soybean Market [https://farmpolicynews.illinois.edu/2025/08/china-remains-absent-from-us-soybean-market/]
[5] U.S. Losing Out on China Soybean Sales as Brazil Fills Key Supply Period [https://www.agriculture.com/partners-u-s-losing-out-on-china-soybean-sales-as-brazil-fills-key-supply-period-11789980]