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Studying history can help us draw inspiration from experience and review the development of the soybean meal market. The 2018 Sino US trade friction caused a huge shock to the supply and demand pattern of the Chinese soybean meal market. With Trump officially confirmed as the President of the United States and about to begin his second term, the market will once again face expectations of a "change in China US soybean trade", which will have a weaker impact on the Chinese soybean meal market compared to the previous one.
The current import status of Chinese raw soybeans in the past decade
1) China has a high dependence on imported soybean raw materials
Chinese feed soybean meal is mainly obtained by pressing imported genetically modified soybeans, so the dependence on imports is relatively high. In recent years, with the rapid growth of feed demand in China, the growth rate of imported soybeans in China has been very significant. According to statistics from the General Administration of Customs of the People's Republic of China, the total amount of imported soybeans in China has shown a fluctuating growth trend since 2012/13. As of 2023/24, the total amount of imported soybeans in China reached 104.7465 million tons, an increase of 77.64% compared to 2012/13, with a very significant growth rate. The main reason is partly due to the growing demand for protein in China; On the other hand, it is closely related to the increasing global soybean production year by year. From the data trend chart, it can be seen that the import volume of soybeans has declined in 2018/19 and 2021/22, mainly due to the impact of the China US trade friction and global soybean production reduction.
2) The trend of the United States' share in import trading partners is weakening, while Brazil's import share is increasing year by year
From the perspective of soybean import trading partners, the main source countries are Brazil, the United States, and Argentina. In recent years, due to factors such as trade issues, severe weather, and policy changes, the pattern of soybean imports has changed, and the global supply center of soybeans has gradually shifted towards Brazil. According to data from Zhuochuang Information, in 2016/17, China's imports of soybeans from the United States and Brazil accounted for 39.4% and 48.50% respectively. In 2018/19, due to the impact of the US China trade friction, the US soybean import share dropped to 12.74%. After the easing of trade in 2020, the US soybean import share showed a recovery growth. In the following years, the import share of the United States remained in a range of fluctuations, while the import share of Brazilian soybeans showed a fluctuating increase trend. As of 2023/24, the import share of Brazilian soybeans has increased to 76.58%. From the perspective of data changes, after experiencing the Sino US trade friction, the supply pattern of raw materials in the Chinese soybean meal market has changed, and the supply capacity of Brazilian soybeans continues to strengthen. From a cost perspective, the transmission of Chinese soybean meal prices to the Brazilian market is gradually increasing.
Through the data analysis of the above two dimensions, it is not difficult to see that the trade friction between China and the United States has a significant impact on China's soybean supply pattern. From the imposition of tariffs to the exemption of tariffs at different stages, CBOT soybean futures prices fluctuate greatly. Both from the perspective of cost price and supply quantity, it has a significant impact on the domestic soybean meal price. Currently, Trump is about to start his second term, and based on historical laws and the current market supply and demand background, Zhuochuang Information is conducting scenario simulations on the future development of the Chinese soybean meal market.
Trump 2.0 soybean meal market scenario deduction.
The history of tax increases repeats itself. The market may experience the process of "expected imposition of tariffs - expected implementation - agreement reached". We analyze from two dimensions: price and market supply. Firstly, from a price perspective, the tax increase policy, from expectation to reality, will have a negative impact on CBOT soybean prices. As time goes by, the negative impact gradually dissipates, and CBOT soybean prices are expected to turn into a volatile trend. But the tax increase has a positive impact on the domestic soybean meal market, and as the positive continues to be digested, prices may show a trend of first strengthening and then weakening. Secondly, from a supply perspective, the imposition of tariffs has a negative impact on US soybean exports, and there may be a temporary supply shortage of domestic soybean meal raw materials. However, considering Brazil's soybean production continues to reach new highs and its export share to China continues to increase, the impact of further tariffs on Chinese soybean meal prices may be significantly reduced compared to 2018. The process of "expected implementation reaching an agreement" is a gradual return of the market to rational fluctuations.
The future Chinese soybean meal market is full of many uncertain factors. However, against the backdrop of continuously reaching new highs in global soybean production and deepening oversupply in the domestic soybean meal market, the impact of "Trump 2.0" on the Chinese soybean meal market has weakened. With the active expansion of domestic soybean planting, low protein diet policies, and the application of corporate financial instruments, the ability of the Chinese market to cope with external disturbances will gradually increase, and the ability of the domestic market to face price trends will also gradually strengthen.