China 'zeroes out' soybean purchases from the US, widening Brazil's advantage in the short term.

A silent but globally impactful movement is beginning to reshape the agricultural landscape. China's decision to suspend soybean purchases from the United States at the start of the new harvest has generated a shift in agricultural trade with direct implications for South America. The redirection of the world's largest buyer to Brazil and Argentina momentarily strengthens the continent's position, but brings complex effects on port basis, export premiums, and processing industry margins.

According to market expert Marcelo Teixeira, the change repositions Brazil at the center of the game. “The trade shock widens Brazil's advantage in the short term, but also demands increased attention. We have already recorded exports above the average of the last five years, but this accelerated increase puts pressure on domestic stocks and could raise the cost of raw materials for local industry, which already operates with very tight margins,” he states.

The numbers confirm Teixeira's analysis. According to a report by JPA Inteligência, Brazil exported 91.2 million tons of soybeans up to September, only 15 million tons below the target projected by Conab for the entire 2024/25 cycle. In August, shipments totaled 9.34 million tons, well above the five-year average of 6.94 million tons. This accelerated pace anticipates risks, since the more raw soybeans Brazil exports, the lower the availability for domestic crushing, which generates meal and oil, fundamental inputs for domestic supply and the protein industry. “We are already seeing some crushing plants practicing meal prices decoupled from Chicago. This means that, even with the American stock market falling, the value of meal in Brazil remains higher, reflecting the scarcity of raw materials. The basis is beginning to distort, and this will be a central point in the coming months,” observes Teixeira.

Bran and oil represent both bottlenecks and opportunities.

With 78% of soybeans converted into meal and 18% into oil, any change in global grain flows directly impacts the industrial mix. The September report from JPA Inteligência adjusted Brazilian soybean meal production to 45.2 million tons in 2024/25, an increase of more than 10% over the previous cycle.

Despite the progress, margins remain under pressure and the outlook is one of caution. Gross crushing margins fell in Mato Grosso, the main industrial hub, to R$ 403 per ton in August, a drop of 7% compared to the previous month. “We are in an environment where the global market signals good supply, but local dynamics can lead to severe distortions. Meal could become the most sensitive link in this chain, whether due to grain scarcity or price pressure,” Teixeira emphasizes.

Impacts on awards and basis

The classic soybean pricing model based on Chicago, premiums, and exchange rates may suffer significant distortions due to the absence of Chinese production in the US and the concentration of demand in Brazil. Premiums at ports tend to inflate, while the domestic basis may narrow, increasing the cost of raw materials for the national industry. "The great risk is that, in the middle of the off-season period, November to January, there will be a shortage of available soybeans in the domestic market. If this happens, the industry will have to pay more, further reducing margins that are already very compressed," warns the expert.

Argentine risk

Another factor capable of quickly changing the scenario is Argentina. Amid the currency crisis, the Argentine government has previously used the strategy of eliminating export taxes (the so-called "retenciones") to raise dollars. A new round is not ruled out, and if this happens, the game changes. "It would not be surprising if Buenos Aires resorted to this measure again, as it already did in 2025. If this happens, China could redirect significant volumes to Argentina, changing the trade flow in a matter of weeks and directly impacting Brazil," analyzes Teixeira.

Geopolitics

China's move is not only commercial but also geopolitical. By suspending purchases from the US, Beijing signals discomfort with the tariffs and increases its bargaining power over South American suppliers. According to Teixeira, the psychological factor also comes into play: “If the rise in prices of soybeans or their derivatives becomes part of the American popular unconscious, as happened with tomatoes in Brazil, the issue becomes a political agenda. If consumers feel the pinch, pressure on Washington to review tariff measures increases,” he emphasizes.

Marcelo adds: “The big issue is that the market is more volatile than ever. A political decision in Argentina or a change in China's appetite can turn the game around overnight. On our side, Brazil needs to be prepared to seize opportunities without losing sight of internal competitiveness risks,” he explains.

Reflections for Brazil

Speaking of Brazil, the world's largest exporter, the move brings immediate gains, but also risks and challenges. The loss of industrial competitiveness, the risk of margin disruption, and the volatility in premiums make strategic management essential. "Brazil emerges stronger in the short term, but needs to be attentive to the geopolitical game and its internal homework. We will only be able to sustain this advantage if we reduce competitive bottlenecks, invest in logistics, and balance the relationship between exports and processing," emphasizes Teixeira.