As year-end approaches, soybean markets are entering what is normally a quiet stretch, but this year, the calm might be deceptive. Arlan Suderman, chief commodities economist at StoneX, says two uncertainties could spark volatility: the EPA’s final biofuel regulations and China’s ability to follow through on its promise to purchase 12 million metric tons (MMT) of new U.S. soybean sales.
And as USDA weighs market loss payments due to tariffs and trade disruptions, which are reportedly coming this week, ag economists cast doubt on if China will buy 12 MMT yet this year, Suderman says the market might have have already priced in a lower amount.
Markets in a Holding Pattern But Not for Long
Suderman describes the current market tone as typical for late November and December, saying: “We’re in a holding pattern right now, and typically between Thanksgiving and Christmas, you get kind of sluggish markets as we’re waiting for new direction after the first of the year.”
But he immediately adds that this year could carve its own path.
“I think this year we have more potential for volatility, perhaps in both directions, because over the next few weeks, we anticipate getting direction from the EPA on the final regulations for the biofuel program,” he adds. “That could be very bullish, it could be bearish. Our bias is to the positive side, but until we know, that’s an unknown that the market’s really not pricing in yet at this point.”
The Million-Dollar Question: Can China Really Buy 12 MMT?
A major focus remains China’s pledge to buy 12 MMT of soybeans in 2025, but even the timing of those purchases is unclear.
“The White House says it’s new purchases for the calendar ’25. China hasn’t given their side of it. That’s why we need to see the agreement, and we hope to get that this week. That should detail it out in addition to details on the other commodities,” Suderman explains.
Beyond the calendar debate, he says there are real logistical limitations.
“What we hear from our cash sources on the ground in China is they don’t have enough storage space if their state grain buyers are going to buy all these because it’s not economical for the private crushers,” he says. “So the only way they could do it would be to wash out some purchases from Brazil. Now that would be bearish for Brazil, cause their basis to collapse, and then some customers who normally buy from us might go to Brazil instead, kind of rearranging the deck chairs, so to speak.”
Suderman says the core issue is straightforward and there are two looming questions that only China can answer.
“How it all plays out is a big question mark. But I think the big key is: Does China make the full 12 million metric tons of new purchases by the end of the year? And when do they take shipment? They can make the purchases and not take shipment till the next marketing year, or they could take shipment in the next few months. That’ll have a big impact on the dynamics of this market,” says Suderman.
Economists Cast Doubt
U.S. Secretary of Agriculture Brooke Rollins and the White House have said China will live up to its promise to buy 12 MMT of soybeans this year, but ag economists aren’t so sure.
Farm Journal’s November Ag Economists’ Monthly Monitor, an anonymous survey, found more than three-quarters (76%) of economists surveyed say China won’t purchase that amount of soybeans this year; 24% of economists think China will.
Those same economists are also divided on whether additional trade aid is needed. Exactly half of economists say yes, trade aid is still necessary, while the other half say no.
But economists overwhelmingly agree on two key risks:
U.S. agriculture has become too reliant on ad hoc payments. A striking 94% say the industry has become “too addicted” to emergency programs. And it’s not just farmers, but also industry and input suppliers who have become reliant upon these payments. Many economists say repeated aid packages distort land values, cash rents, equipment purchases and overall decision-making.
One hundred percent of economists argue tariff-aid payments will keep fertilizer prices high. Every economist surveyed says tariff aid would keep input prices elevated, particularly fertilizer.
But this also leads to a bigger issue: Is there enough competition in the fertilizer market? Two-thirds (67%) of economists surveyed say there is not enough competition in fertilizer markets.
- Fertilizer prices track crop prices, not energy costs — a sign of market power.
- The market is concentrated and driven by a handful of global producers.
“The fertilizer market appears to be very concentrated, limiting competition,” said one economist in the anonymous survey. “In a competitive fertilizer market, fertilizer prices should track more closely with energy costs as the primary input cost in fertilizer production (supply) instead of tracking more closely with crop prices as the primary demand for fertilizer. Prices correlating more closely to production costs suggest a competitive supply-driven market. Prices correlating more closely with crop prices suggest a demand-driven market with some market power.”
“More competition is always better, but closing out competition with trade barriers right now is a bad idea,” one economist said.
“While we only have a few suppliers, there is not competition to offer lower prices. Fixing this is a whole other issue,” said another economist in the monthly survey.
“Economies of scale are so large that firms will be few in number. Breaking them up may lead to more competition but also higher prices as economies of scale are lost,” was another comment in the November survey.
What Traders Are Actually Pricing in
Right now, Suderman says the market is assuming something less than the full 12 MMT pledge.
“I think the market has priced in expectations that maybe they’ll take 8 to 10 million metric tons, and they’ll take it during the marketing year between now and the end of August,” he says.
He adds that traders expect the 25 MMT earmarked for 2026 could be purchased sooner but shipped later.
U.S. Soybeans Still Too Expensive for Private Buyers
Even if China lifts its 10% retaliatory tariff, as many expect, it still won’t make U.S. soybeans the cheaper option for commercial crushers.
“For the private crushers, what they would have to pay if there were no additional tariff—and there still is a 10% retaliatory tariff—we expect that to come off soon. But even if it comes off, our U.S. soybeans are priced 70 to 80 cents above Brazilian soybeans landed at the port in China,” he says. “And so we’re still not competitive from that standpoint. And with new crop harvest just weeks away in Brazil now, we’re probably not going to get competitive. So it’s going to have to be state purchases.”
Livestock Margins, Not Disease, Are the Real Drag on Feed Demand
While there are recurring late-year rumors of disease in China’s hog herd, Suderman doesn’t see unusual issues at the moment.
“Every year we hear this time of year about disease in China,” he says. “We don’t see anything at this point that’s out of the ordinary.”
Instead, he points to weak margins across all major protein sectors.
Instead, he says the real challenge is weak livestock economics.
“The bigger problem is the poor returns, the poor margins for livestock feeding—be it pork, be it poultry, be it all forms of protein right now. Demand for protein is simply not there,” Suderman explains. “So they’re shrinking the size of their herds, their flocks, etc. And that’s reducing demand for corn consumption. They actually expect to see corn consumption go down next year versus prior year. That’s a reversal of the normal trend for soymeal demand as well.”
He adds that China is still buying soybeans for a strategic reason and one that agriculture needs to prepare for now.
“Soybean demand is only being held up right now by China building its reserves so that when President Trump’s no longer in office, they can never buy another soybean from us again.”
If the U.S. Must Rely Less on China, What’s the Quickest Way to Do So?
Rollins recently warned that reducing reliance on China will be difficult. Suderman agrees but insists it’s necessary and will take not only striking new trade deals and finding new markets, but building domestic demand.
That includes:
- A strong biofuel program
- New trade agreements
- Expanded global access
- Domestic demand growth
“I’ve been saying that for four or five years, that we were going to lose China. Let’s go to all of the above,” he says.
He believes some recent trade pacts signed by Trump are “very good for demand,” though he cautions nothing can fully replace China’s market size.
Still, Suderman says there is reason for optimism as biofuel infrastructure.
“With the all-of-the-above approach, we do have a bright picture down the road,” he says.
What to Watch Through the End of the Year
China’s ability to follow through on its 12 MMT soybean promise remains highly uncertain. Storage constraints, price disadvantages, and weak domestic protein margins are all complicating factors.
Suderman says the market is prepared for 8 MMT to 10 MMT but not the full pledge.
What China does, or doesn’t do, over the next few weeks could shape the soybean market well into 2026.
“Some of these trade packs that President Trump has signed are very good for demand. It’s not going to replace China by any means. You can’t do that, it’s not the same size market. But I think with the all-of-the-above approach, we do have a bright picture down the road as we get the biofuel infrastructure built up,” says Suderman.