【By Liu Bai, Observer Net】

On September 22, the Hong Kong English media "South China Morning Post" noticed that under the risk of prolonged trade conflicts, Chinese companies have increased their soybean inventories. In August, China's soybean imports hit a new high, mainly from Brazil.

Customs data shows that from January to August, China imported a total of 73.312 million tons of soybeans, an increase of 4% compared to the same period last year. Among them, the soybean import volume in August was 12.279 million tons, a slight increase of 5.2% compared to the previous month, which is the fourth consecutive month setting a new record for the same period.

The report said that to hedge against the supply uncertainty in the fourth quarter caused by the ongoing trade conflict with the United States, this is the second highest single-month import volume in Chinese history, second only to the 13.9 million tons in May this year. Brazil supplied 10.49 million tons, accounting for more than 85%. Due to a bountiful harvest of Brazilian soybeans, China's procurement from Brazil increased by 2.4% year-on-year.

Different regions have different soybean harvesting seasons. The U.S. harvest season will start in autumn. This means that the impact of China's countermeasures against U.S. agricultural products will become more significant starting at the end of this year.

Soybeans are a key raw material for China's animal feed industry. The United States used to be China's largest soybean supplier. However, as the tension between the two countries has escalated in recent years, China has taken measures to reduce its reliance on U.S. crops.

Although China imported 227,000 tons of soybeans from the United States last month, an increase of 12.3% year-on-year, this number still accounts for a small portion of China's total imports.

Analysts from the online platform Cngrain.com, in a report released on the 19th, stated that due to "the ample supply of South American soybeans and the slow progress of Sino-U.S. trade negotiations, which also prompted refiners to increase purchases to mitigate potential supply shortages," the import volume in August exceeded expectations.

From January to August this year, China's cumulative soybean imports totaled 72.9 million tons, an increase of 4.7% year-on-year.

April 4, Rio Grande do Sul, Brazil, farm workers harvesting soybeans. IC Photo

According to a report from the futures service department of China International Capital Corporation (CICC) wealth management, China's shipping plans show that its soybean import orders for the fourth quarter have been basically determined, mostly from Brazil, while orders from Argentina and Uruguay are also increasing.

The report said that if China and the United States fail to reach an agreement in the fourth quarter, the supply situation for imported soybeans in the first quarter of next year may become challenging.

Last year, U.S. soybeans accounted for 21% of China's total imports, down from 34% in 2017, the year before Trump initiated the trade conflict during his first term.

At the same time, Brazil's share rose from 53% in 2017 to 71% in 2024.

Normally, the fourth quarter is a critical sales period for U.S. soybeans, when newly harvested soybeans gradually come to market. At this time of year, before the U.S. soybean harvest season starts on September 1st, China usually completes about 14% of its annual soybean procurement.

However, this year, China has not yet booked any U.S. soybean shipments for the fourth quarter.

Earlier, Reuters quoted two sources saying that due to the ongoing Sino-U.S. trade conflict, Chinese soybean importers will increase procurement from Argentina and Uruguay in the next year to fill the U.S. supply gap.

The report said that the increase in soybean supplies from these two Latin American countries will overlap with China's large-scale imports from Brazil, dealing another blow to U.S. exporters.

In recent weeks, U.S. agricultural groups have called on the Trump administration to reach an agreement with China as soon as possible, as China's tariff retaliation has pushed U.S. soybeans out of the market, putting pressure on U.S. farmers.

On August 19, U.S. soybean growers sent an open letter warning that the current planting costs for soybeans are continuously rising, while sales prospects are more bleak than ever. If an agreement on soybean purchases cannot be reached with China, the U.S. will suffer serious economic losses.

"Farmers are under huge financial pressure. Soybean prices continue to fall, and the costs of materials and equipment invested by our farmers for planting soybeans have significantly increased. U.S. soybean farmers cannot withstand long-term trade disputes with our largest customer."

Bloomberg mentioned that looking back at Trump's previous term, in 2019, due to concerns over farmers' dissatisfaction with falling prices and limited exports caused by the trade war, the U.S. Department of Agriculture worried about the situation getting out of control and canceled the 27-year-old inspection team activities, and also changed a local interview of a senior official from the National Agricultural Statistics Service to a live television broadcast.

To stabilize the farmer group, a key voter base, it was also during this time that Trump added an additional $1.6 billion in funding to the $1.2 billion agricultural aid, and even hinted at providing more support to ease farmers' grievances about the trade war.

Although the current mood is not as intense as in 2019, the members of the inspection team clearly felt that anxiety is quietly rising.

Bill Timblin, a farmer from Nebraska participating in the inspection team, voiced his feelings: "I just hope they (China) can restart purchases and not permanently close the door to U.S. soybeans."

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