By Ulf Bergman
The US President’s recent visit to China with his entourage generated a significant number of headlines in the press and afforded the guests and hosts ample photo opportunities. On the other hand, the bilateral meetings yielded very little in terms of tangible outcomes. A deal involving Boeing selling aeroplanes to China, albeit in smaller numbers than widely expected, appears to be one of the few sealed. In addition, the US President and Beijing suggested that several agreements were reached, including one on American agricultural exports to China. However, details remained scarce.
China Committing to Imports of US Agricultural Commodities
Still, according to the White House, China has committed to purchasing at least seventeen billion dollars worth of US agricultural products annually over the next three years. The deal is in addition to the agreement reached in October last year regarding increased Chinese purchases of US soybeans. Under last year’s agreement, China will buy a minimum of 25 million tonnes of American soybeans annually from 2026 to 2028.
US agricultural futures rose on Monday amid the news that a new deal had been reached. However, the scarcity of details and the lack of Chinese confirmation have led to the contracts retreating over the past few days.
Significant Upside Potential for US Agricultural Seaborne Exports
Amid trade spats and political manoeuvring, Chinese imports of US agricultural commodities have fallen sharply over the past few years. According to USDA data, since peaking in 2022, the value of US agricultural exports fell by around 50 per cent last year. The shift has benefited the farmers in South America, and especially in Brazil.
According to cargo flow data from Signal Ocean, seaborne exports of US agricultural products to China collapsed last year amid tariffs and political tensions. A mere 7.5 million tonnes left US terminals bound for Chinese ports, with nearly three-quarters of the total being soybeans. The decline saw last year’s total volume decline by 77 per cent compared to 2024. While US farmers managed to find alternative buyers, with total seaborne exports recording a modest increase, the importance of the Chinese market for US soybean exporters was highlighted as aggregate shipments of the oilseed declined by 34 per cent year-on-year.
If the new deals deliver anywhere near their ambitions, unlike the largely undelivered Phase One deal signed at the beginning of the decade, a minimum of 25 million tonnes a year of soybeans shipped from the US to China will make a considerable difference in the trade. It would bring volumes broadly in line with what was recorded in 2023 and 2024. Any additional volumes resulting from recent deliberations in Beijing would be a bonus, but as details remain elusive, it is probably better to take a cautious approach.
A promising sign is that this year's volumes of US soybean exports to China already surpass the total for the whole of last year by around 90 per cent from a very depressed 2025 base. Hence, with nearly eleven million tonnes already shipped, the goal of at least 25 million tonnes for the year looks viable.
Assuming the usual summer lull in the US-China soybean trade sets in, more than 14 million tonnes should be shipped during the fourth quarter, broadly in line with developments in 2024. This would also have the potential of restoring total US soybean exports. Such a development would mostly support demand in the panamax and supramax segments.
Still, some caveats are worth noting to an otherwise bullish scenario for freight rates in the mid-sized segments during the second half of the year amid likely higher US soybean shipments. China's recent shift toward Brazilian suppliers has led to a boom in shipments from South America, with year-to-date Brazilian export volumes of soybeans bound for China three per cent higher than during the same period last year. Hence, there are question marks over how strong actual Chinese demand will be later in the year and whether there is appetite to build inventories.
Also, it is often said that a week in politics is a long time, but in geopolitics, it could be an eternity. A lot can happen before the US harvest season, which can derail the US soybean exports to China.
Data source: Ocean Analytics