Brazil and the Global Soy Market: Between Opportunities, Risks, and the Resurgence of Chinese Demand

Global soybean supply and demand scenario is open and, furthermore, depends on the relationship between China and the United States.

Created by Copilot, representing the growth in demand for Brazilian soybeans

1. Global Context and New Trade Dynamics

The ongoing trade war between China and the United States continues to reshape the global soy market. Tariffs imposed by China on American soybeans have significantly reduced U.S. competitiveness, forcing China to seek viable alternatives. As the world's largest exporter, Brazil benefits from this shift but must carefully manage its supply to avoid domestic imbalances.

This scenario becomes even more complex with the changing profile of Chinese demand. Although China maintained a high volume of soybean purchases from Brazil in 2024, its initial preference was for acquisitions through the major ABCD trading companies (ADM, Bunge, Cargill, Cofco, and Dreyfus), which offered more competitive pricing. However, as the season progressed and demand surged, these traders may have reached their selling capacity, prompting late buyers from China to seek supply from other companies, including independent exporters. This trend reflects a market increasingly hungry for lower prices and concerned about future stock shortages. The high premiums in futures contracts further underscore this shift in behavior, signaling accelerated appreciation of Brazilian soy.

2. Global Production and Soy Futures Premiums

United States: U.S. planted area is lower this year, and weather conditions in the Corn Belt are not favorable for a large crop. Production is expected to be around 118 million tons, with little room for yield fluctuations. Additionally, strong domestic crushing in the U.S. is further reducing the available export supply.

• Brazil: The country has already sold about 60% of its 2024/25 crop, maintaining competitiveness in the market. However, Chinese demand may put pressure on Brazilian stocks, requiring careful planning to avoid shortages.

  
  

• Futures Contract Premiums: Currently, futures contracts reflect significant values:

  • September: premium of $1.42 per bushel

  • October, November, and December: premiums around $1.65 per bushel

With the resurgence of Chinese demand, Brazilian premiums may skyrocket, making commercialization a critical issue for producers and exporters.

3. Impact on Exporters and the Brazilian Market

The appreciation of Brazilian soy presents opportunities but also risks that require strategic planning:

• Stock assessment: Holding back sales may be a viable alternative to capitalize on potential premium increases in the coming months.

• Export flow analysis: Increased Chinese demand calls for logistics adjustments and careful negotiation to maximize gains.

  
  

• Supply shortage risk: A rapid acceleration of exports could compromise domestic availability, requiring cautious commercialization strategies.

  
  

Another relevant factor is the competitiveness of Brazilian soy compared to U.S. soy. Due to tariffs, China avoids early purchases from the U.S., favoring Brazil, which remains a strategic supplier.

4. Final Considerations

The growing Chinese demand for Brazilian soybeans is not only a result of tariffs on the U.S. but also of Brazil’s competitive edge in a global market with limited supply. Countries like Argentina, which prioritize crushing over raw exports, and Russia, whose production is marginal on a global scale, cannot fully meet Chinese needs. This reinforces Brazil’s strategic role as China’s leading soybean supplier.

However, this sudden spike in demand requires caution. Many Chinese buyers, particularly those now seeking soy outside the major trading firms, exhibit a more speculative behavior, focusing on aggressive negotiations to maximize immediate profits rather than on sustainable industrial planning. This approach may cause price volatility and impact domestic market stability.

With high futures premiums and increasing demand, Brazil has the opportunity to solidify its global position. However, to prevent market distortions and potential supply imbalances, producers and exporters must adopt strategies that balance profitability and market security. The challenge is not just meeting external demand but ensuring that market conditions remain favorable for all players in the supply chain. Did you like the article? Like it and share it on your social network.