Preliminary
On the one hand, American soybean farmers watch tons of soybeans in the granary become moldy because they can't be sold, and on the other hand, Brazil, which occupies the Chinese market, sits on the ground and raises prices.
I thought China would worry about soybeans, but I didn't expect Chinese buyers to stop buying them collectively, and calmly said: Wait for two opportunities.
Why can China stabilize the situation? What are the so-called two timings?
If you dare to start a price, I dare to collectively stop buying: A silent war
In mid-October, these four letters, like a stone, crashed into the quiet domestic crude oil market. Brazil’s offer is more than $1 per purple per U.S., and the premium gap is visible to the naked eye.
Faced with the sudden wave of “fighting robberies,” Chinese buyers collectively suspended purchases of ship-period soybeans in December and January next year.
A seemingly passive crisis kicked off.
However, is this really a crisis? Perhaps, it is more like a well-laid stress test.
A comprehensive test of the resilience and strategic wisdom of China’s food security system.
The reason why Chinese buyers were able to resolutely "collectively stop purchasing" was derived from the three solid "cards" held by the Chinese side.
These three trump cards jointly build a solid line of defense against short-term supply fluctuations, and also give Chinese enterprises calmness and confidence at the negotiating table.
The first trump card is the strong national strategic reserve. The national reserve of soybeans is China's "ballast stone" to deal with food security issues and stabilize market fluctuations.
Data from the National Grain and Oil Information Center clearly shows that China's current strategic soybean reserves are particularly sufficient.
This means that once there is a tension in the supply market or a dramatic fluctuation in prices, the country is fully capable of rapidly increasing the supply and lowering prices by putting soya reserves into the market in a timely manner, ensuring that domestic consumer demand in recent years is safe.
This buys China buyers valuable negotiation time and strategic space, allowing them to calmly wait for favorable opportunities without having to panic accept any unreasonable high prices.
The second card is an increasingly mature diversified import system.
Since Brazil first surpassed the United States in 2018 as China’s top soybean supplier, China has never stopped exploring new import channels.
In addition to Brazil, China also steadily imports soybeans from Argentina, Uruguay, Canada and other countries. Customs data shows that these countries will account for about 7% of China's soybean imports in 2024.
Although the volume is temporarily not as good as Brazil's, this diversified import pattern effectively diversifies the risk of a single origin.
At the end of last month, China also purchased large amounts of Argentine soybeans, which were mainly shipped for November, which is the example of China’s flexible use of diversified channels and avoiding high price risks.
The third trump card is a technological alternative for continuous breakthroughs. Self-regulation and optimization on the demand side is another major advantage for China in this game.
As the main source of livestock and poultry feed protein, soybean meal consumption is directly related to the overall demand for soybeans.
In recent years, China has made important technological breakthroughs in feed formulation. The technology of replacing soybean meal with miscellaneous meal such as rapeseed meal and cottonseed meal has become increasingly mature, and the substitution ratio has steadily increased to 15%.
These three cards, one can not be less, with them, China can in this game, in retreat has a basis, relaxed has a degree.
Three rulers hidden behind bean prices: who is measuring and who is being measured?
So why does Brazil dare to enter so far?The root of this price storm is deeply rooted in the macro-context of the Sino-American trade game.
As the world's largest soybean importer, China has strategically adjusted its import sources and reduced its dependence on American soybeans in recent years in order to ensure the security of its supply chain and serve as a bargaining chip in trade games.
In this strategic adjustment, Brazil has become the biggest beneficiary as an important alternative.
However, when Chinese buyers stopped ordering U.S. soybeans due to ongoing trade tensions, some Brazilian exporters seemed to be willing to take advantage of this short “supply window” to seize excess profits by drastically raising the offer.
This kind of behavior has directly impacted domestic enterprises in China.
According to industry insiders, since the second half of this year, the profits of domestic soybean oil companies have been in a negative range for a long time.
The starting price of Brazilian soybeans is no different than "salt on wounds".
While China is the world’s largest buyer, it is often in a passive position in terms of pricing power, with global soybean prices determined by the contract price of the Chicago Futures Exchange (CBOT), which is the benchmark.
The final price sold to China is based on this benchmark, plus a so-called "premium".
This “promotion of water” is the key to determining the final price.
It is precisely this most critical link whose right to speak has been in the hands of exporters for a long time. They can adjust this "premium and discount" at will according to their own inventory, judgment on the market outlook, and even pure speculative psychology.
It is precisely because Brazilian exporters have amplified the regional premium premium that the price of Brazilian soybeans has become so "outrageous." Under this pricing mechanism, suppliers have the initiative to adjust the premium premium, which has a great impact on China.
This is the dilemma we are facing.
We buy a lot but don’t have the power to set prices.We are big, but we have to accept the rules of others.
China's answer is strategic patience, a higher-dimensional wisdom.
It is not passive waiting, but by consuming opponents 'speculative time and opportunity costs while having enough trump cards, waiting for market rules to take effect, thereby defeating others without fighting.
The suspension of purchasing soybeans from December to January by Chinese buyers is not only a market-oriented strategic countermeasure, but also an inevitable business choice made by enterprises to avoid greater losses and ensure their own survival when costs have risen sharply and product prices are difficult to increase simultaneously.
Soybeans are a mirror that captures the short-sighted view of Brazil and also captures China’s expedition.
Soya photographed Brazil's short-sight, also photographed China's expedition, and we will find that this is not just a game about soybeans.
It is a comparison of national development models and a comprehensive test of system resilience.
In recent years, China has faced similar challenges in many key areas. Whether it is chips, energy, or food, we have all experienced the pain of being "stuck", but every pain has given birth to a profound change.
In the field of chips, we increase independent research and development, strive to independent control, in the field of energy, we vigorously develop new energy, reduce dependence on the outside.
In the food sector, we have built a complete response system called “Reserve + Multiple + Alternative”.
This system is not a temporary plan, but a thoughtful long-term layout.
It reflects China’s unique wisdom of survival and development philosophy in the face of global uncertainty.
This wisdom is in sharp contrast to the practices of some western countries.
Japan, as an island country with scarce resources, responds by building ultra-high inventory and pursuing absolute self-protection.
The European Union has built a closed internal market through a common agricultural policy and huge subsidies.
Each of these methods has its own reasons, but it also has its limitations.
China's model is more open and flexible. We insist on globalization and do not engage in isolation, but we resist the risks of globalization by building strong internal resilience. We do not seek confrontation, but we have the strength to make the other side dare not easily provoke.
This is a smarter strategy. It is not simply "de-risk", but "risk management and control".
It recognizes the existence of risks, proactively manages risks, utilizes risks, and even transforms risks into driving forces for its own growth.
This soybean storm is the best proof.
A price increase allows China to see its opponents clearly and the world to see China clearly
One price hike, let China see clearly the opponent, also let the world see clearly China.
China's collective wait-and-see and suspension of purchases are not waiting indefinitely, but patiently aiming at two key opportunities that can reverse the current price deadlock.
Once the time is ripe, the balance of supply and demand in the soybean market will be calibrated again and prices will return to rationality.
The first opportunity is the forecast for the upcoming abundance of Brazilian soybeans.
According to the latest forecast of the Brazilian National Commodity Supply Company (CONAB), the production of soybean in Brazil in 2025/26 is expected to reach a record 1.776 billion tons, with export potential of up to 1.1 billion tons.
Such a huge potential supply is expected to be harvested and marketed early next year and shipped to China at the end of January.
This clear yield expectation will fundamentally alleviate the supply tension, thus forcing the current overestimated price to fall from the high level, and Chinese buyers have just seen this, choosing to use time to change space, waiting for the price dividends brought by the South American new soybean harvest.
The second opportunity is a potential breakthrough in a new round of China-US trade talks.
Soya trade has always been a sensitive point and an important issue in the Sino-U.S. economic and trade relations, and despite current tensions, the communication channels of the two sides have not been completely closed.
Industry analysts believe that once China and the U.S. can reach a new deal on trade issues, Chinese oil plants may switch to purchasing U.S. soybeans between December and January, as prices for U.S. soybeans are currently more attractive than for South American soybeans.
You know, even in 2024, when imports have dropped significantly, China still imported 22.13 million tons of soybeans from the United States.
U.S. soybeans, a powerful "alternative" supply channel, always reminds them that if prices are raised too far, they may lose China, the world's largest market, at any time.
When those two key "breaking points" come, the rational return of soybean prices will be inevitable.
conclusion
The essence of this storm is not a price war, but an open class about national wisdom and system resilience.
In the future, whoever can build a safer supply chain will have the real initiative in the global landscape.
In addition to the "three trump cards", what "hidden trump cards" do you think China has to deal with global challenges?