Continued U.S.-China Tension Affecting Soybean Trade in 2018/19

As of the October 4 U.S. Exports Sales, U.S. soybean outstanding sales are below last year owing to fewer sales to China, which are currently 85 percent below last season. Anemic weekly sales and significantly lower outstanding sales indicate that there is not much interest in purchasing U.S. soybeans by China, primarily due to its decision to include soybeans on the list of key U.S. commodities that are subject to retaliatory tariffs. U.S. soybean exports to China typically reach their lowest levels in summer and then build strength as harvest progresses. However, a large pullback in Chinese demand for U.S. soybeans appears likely to continue well into 2018/19.

U.S. accumulated soybean exports were a little over 3.0 million tons or 23 percent below last year. Accumulated exports to China were only 67,000 tons, which is 2.5 million tons less compared to last year. Weekly shipments to the rest of the world were 1.6 million tons above last year; however, they did not fully offset reductions for China.

U.S. soybean sales to the rest of the world (including unknown) are 42 percent above last year, though the ability for the rest of the world to make up for typical exports to China will be tested. The export sales are a good forward indicator of shipments; however, unlike China, many markets such as the European Union, the Middle East, and North Africa do not purchase soybeans in advance, so the report’s usefulness as a predictor of future shipments is limited.

2017/18 U.S. Soybean Share in China Falls

Based on available trade data, USDA estimates that 2017/18 U.S. soybean market share in China has fallen to 29 percent from 39 percent last year, while Brazil surged to 66 percent from 48 percent. According to U.S. Census Bureau trade data, U.S. soybean exports to China (Sep-Aug) were the lowest in volume since 2013/14 and the lowest in value since 2009/10.

The United States and Brazil are the primary soybean suppliers to China. With each supplier having alternate growing and harvesting seasons, China’s imports have historically run in a cycle with high imports from the United States between September and February (Brazil’s growing season) and then high imports from Brazil between March and August (U.S. growing season).

During September-December 2017, the United States shipped 18 percent less soybeans to China than in 2016. With record supplies available on September 1, Brazil exports to China rose more than three-fold in the final four months of 2017, and this increase more than offset lost trade from the United States. In the first months of 2018, with the start of the Brazilian soybean harvest, the prospects of an uptick in the pace of U.S. sales to China were limited. During January-February 2018, U.S. exports to China were 24 percent lower than over the same period in 2017. In the meantime, Brazil continued its soybean shipments to China at nearly the same pace as the previous year. U.S. soybean exports to China between January and July did relatively well in volume terms; however, the Calendar Year pace was the lowest since 2013.

The implementation of retaliatory tariffs led to an adjustment of trade flows in global soybean markets. An export price gap that opened between the United States and Brazil continued to widen towards the end of the marketing year, leading to fewer Brazilian sales outside of China and greater U.S. exports to other-than-China markets. Trade tensions between the United States and China will continue to affect soybean and soybean products trade in 2018/19.

USDA Adjusts Indonesia and Malaysia Palm Oil PSDs

Due to new assessments of palm oil production and exports for Malaysia and domestic consumption and exports of biodiesel in Indonesia, USDA has adjusted downward estimates of global palm oil ending stocks.

Malaysia palm oil production was adjusted downward for 2017/18 and 2018/19, however the change was more than offset by lower exports in 2017/18. Indonesia palm oil stocks were lowered going back to 2012/13. The reduction was based on new assessments of domestic use, primarily driven by higher consumption of biodiesel. Adjustments for 2017/18 incorporate recent exports of Indonesian biodiesel to China.

These combined adjustments for the two largest palm oil producers dropped global ending stocks of palm oil in the following years:

  • 2012/13 (9.2 million tons to 9.1)
  • 2013/14 (9.6 million tons to 9.0)
  • 2014/15 (10.2 million tons to 9.9)
  • 2015/16 (8.9 million tons to 8.1)
  • 2016/17 (9.2 million tons to 8.3)
  • 2017/18 (10.9 million tons to 9.7)
  • 2018/19 (12.0 million tons to 9.9)


Global oilseed production is forecast slightly lower this month at 604.0 million tons. Soybeans are forecast slightly up at 369.5 million tons, as gains for Canada exceed losses for India, Mexico, and the United States. The rapeseed crop estimate is higher this month as gains for the European Union, Ukraine, and the United States more than offset reductions for Australia. Global soybean imports are up slightly, driven by Mexico. Soybean exports are up on projected higher exports for Canada. Palm oil production is down on reductions for Malaysia. The U.S. season-average farm price for soybeans is projected down $0.30 at $8.60 per bushel.


U.S. soybean export bids in September, FOB Gulf, averaged $312/ton, down $23 from August. In comparison, FOB Brazil Paranagua averaged $397/ton, up $3. FOB Argentina Up River averaged $380/ton, down $3. In the first half of September, prices in the United States saw downward pressure from prospects for burdensome supplies. In the second half of September, soybean prices saw an uptrend supported by a slowdown in harvest progress due to excessive precipitation in parts of the Midwest.

U.S. soybean meal export bids in September, FOB Gulf, averaged $357/ton, down $26 from August. In comparison, FOB Brazil Paranagua averaged $348/ton, down $10. FOB Argentina Up River averaged $342/ton, down $10. Many countries, except China, have raised their soybean imports and crush above expectations to offset shortfalls in Argentina’s soybean meal exports, thereby pressuring meal prices.

Soybean and palm oil prices recorded an impressive recovery driven by healthy biodiesel production and a rally in crude mineral oil prices. Additionally, in September, the European Commission decided to postpone its decision to resume additional import duties on Argentine biodiesel. Soybean crush margins continue to be very good in the United States. Increased year-over-year global production of palm oil has put downward pressure on prices in Malaysia and Indonesia. However, with most recent production estimates lower for Malaysia and increased biodiesel consumption and exports in Indonesia, palm oil prices saw an uptick.


For the week ending September 27, U.S. 2018/19 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 1.3 million tons compared to 10.7 million a year ago. Total commitments to the world were 20.2 million tons, compared to 23.3 million for the same period last year. Accumulated soybean exports in the new marketing year were at 3.1 million tons, which is 23 percent below the same period last year. Accumulated soybean exports to China were only 67,000 tons, which is 97 percent below or 2.5 million tons less than last year. Weekly shipments to the rest of the world were 115 percent above last year’s (1.6 million tons more); however, they did not fully offset reductions for China.