Soybeans stepped to the top of the world stage last week in Asia, where a long-awaited summit with China President Xi climaxed President Trump’s whirlwind diplomatic mission.
Right on cue before the meeting, China finally booked its first cargoes for 2025 crop soybeans. But the size of the deals – around 6.6 million bushels – is a drop in the bucket compared to the 828.6 million China imported last year from the U.S.
As I’ve pointed out recently, China has no choice but to buy U.S. originations. Brazil can’t grow enough to feed the world’s largest nation all by its lonesome, and Argentina can’t pick up the slack – its processing industry is a key source of jobs and revenue for the government. And, as the deal to end the first trade war showed, goals on paper are one thing. Actually buying all those beans is another.
And in any case, initial goals for the 2025-26 crop are modest. Treasury Secretary Scott Bessent, a billionaire who describes himself as a soybean grower, said China might buy less than 500 million bushels of new crop production before taking twice that much in each of the following three years.
The month-long government shutdown complicated tracking any Chinese moves, because the budget standoff effectively blacked out news of U.S. sales. That left traders as the only source of rumors and leaks, and soybeans weren’t the only commodity making headlines.
A sudden pop in nitrogen costs last week briefly threatened to upend potential 2026 rotations by making corn less attractive. But an 8% jump in Middle East urea costs after a reduction in supplies out of the Caribbean didn’t cause widespread panic among buyers, making the disruption look like a one-off.
If soybean fundamentals don’t change significantly from USDA’s last forecast in September, average break-evens should remain around $11.60 cash, which was still well above the market following the U.S.-China summit. China accounted for 45% of all 2024 crop U.S. soybean exports, though USDA predicted the total would be down 10% for 2025. My model put the bottom of the 2025-26 selling range for futures at $11.46. July 2026 futures peaked at $11.425 Friday, suggesting the market is becoming a decent value.
China’s economy is slowing
Economic data out of China also show the Communist government has other fish to fry – ones that are starting to stink ahead of the frying pan. Xi has long proposed making domestic consumption from its shrinking and aging population a bigger part of China’s economy. The Communist Party’s Central Committee repeated that pledge for a pivot last week, unveiling its 15th five-year plan amid slowing third quarter growth and rising debt levels.
On Fed cuts: Stay tuned
While China and the U.S. settled into their uneasy truce, other fissures in the global economic system emerged. The Federal Reserve as expected cut its benchmark for short-term interest rates by one quarter of 1%, but the move wasn’t unanimous, with dissenters calling for both higher and lower rates.
Chair Jerome Powell threw fuel on the fire by noting “a further reduction in the policy rate at the December meeting is not a foregone conclusion.” That’s a banker’s way of saying: Stay tuned.
