After several months of waiting, China has finally booked U.S. soybeans for import. This came ahead of the long-awaited meeting between President Donald Trump and President Xi from China. While this was positive for soybean futures, news of additional China soybean demand was more of a highlight.

Treasury Secretary Scott Bessent has announced China will be buying 12 million metric tons of U.S. soybeans before year end. He further stated China would be buying 25 mmt of U.S. soybeans annually for the next three years. Bessent also stated other Asian buyers are looking at sourcing 19 mmt of U.S. soybeans, but no timeline was given. No corn or wheat intentions were released, but China is expected to buy “massive” volumes of U.S. sorghum.

There is an underlying issue in China that has impacted the country’s commodity demand from any source, and that is deflation. China’s economy has struggled ever since the COVID pandemic, despite several rounds of government stimulus that are still taking place. Even with retail costs of most products falling in China, so is demand as consumers are not engaged. This includes food demand as China is reporting a 1.6 percent decline in restaurant sales. This fall in consumer demand has slowed China’s appetite for several products, including commodities.

The trade dispute between the United States and China has greatly benefited Brazil soybean exports, but Argentina has also been a benefactor. China booked a large volume of Argentine soybeans when the Argentine government suspended export taxes and helped push soybean demand well above last year. A larger soybean crop is also allowing Argentina to export more product. The Argentine Ag Minister now says 2024/25 soybean exports will total 12.3 million metric tons, 3 mmt more than the prior year.

The Energy Industry Administration released data showing expansion in the U.S. biofuel industry slowed in 2024. Expansion in the industry totaled 3 percent in 2024, adding 391 million gallons of renewable diesel and other biofuels. While an increase, this was just one-third of the expansion seen in 2022 and 2023. Reduced margins have slowed expansion in the industry, which is actually favorable long-term as it prevents over-production. Ethanol remains the primary renewable fuel and the only one seeing its expansion build. Total U.S. ethanol capacity stands at 18.5 billion gallons.

The American Petroleum Institute released a statement that has weighed on the ethanol industry. The API has been a supporter of expanding ethanol use, but the group announced it is withdrawing its backing of year around use of E-15. The group stated an updated approach to E-15 legislation, along with several other changes are needed, and has reached out to the White House to make reforms. The ethanol industry has been hoping for permanent implementation of year around E-15 use since it has been allowed for the past several years anyway.

The Brazilian soybean crush firm ABIOVE has released updated supply and demand soybean numbers. For production, ABIOVE is predicting a crop of 178.5 million metric tons, up from their previous 176.8 mmt estimate. Soybean exports are forecast at 111 mmt, an increase of 1.5 mmt from before. ABIOVE is predicting soy meal production of 46.6 mmt and exports of 24.6 mmt, both record large. Soy oil production is also expected to be a record 12.1 mmt, but even so, the country will need to import another 125,000 mt to satisfy projected demand. This import figure is a 25 percent increase from last year.

The analytical firm Rabobank also updated its Brazilian production numbers for both corn and soybeans. Rabobank puts the Brazil soybean crop at 177 mmt, up 3 percent from last year. A 2 percent expansion in plantings is behind the larger crop estimate. Brazil’s soybean export forecast was held at 111 mmt, equal to last year as Brazil’s domestic soybean consumption is rising as fast as production is.

Rabobank predicts a Brazil corn crop of 137 mmt this year, down 3.5 percent from last year. Corn plantings are forecast to expand by 2.2 percent from a year ago, but a return to normal weather will likely limit yields. The same domestic demand is forecast to cut Brazil’s 2026 corn exports to 37 mmt, a year-to-year decline of 5 percent.

More attention is being placed on global production data, and while some regions of the world are producing large crops, some areas are seeing production issues. One of these is the European Union who has trimmed both its grain and oilseed crops. Even so, the EU has not upped its imports of either corn nor soybeans from a year ago. EU corn imports to date total 5 million metric tons versus last year’s 6.84 mmt. Soybean imports total 3.62 mmt compared to last year’s 4.28 mmt. EU soy meal imports total 5.68 mmt, which is close to last year’s 5.89 mmt.

The Federal Reserve lowered its interest rate by an expected 25 basis points in its October meeting. This takes it to a range from 3.75 percent to 4 percent. The vote came in at 10 to 2, with one vote for a larger cut and one for no cut at all. The Fed stated that given available data the amount of economic uncertainty is still elevated. One concern is the risk of unemployment, although inflation does remain above the target of 2 percent and has started to rise.

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