Soybeans may be bland eating, but they spice things up in global trade conversations all the time.

As one of the most critical crops exported from the United States to China, they often become the flash point in trade talks, whether tariffs are on the table or not. China has wisely diversified their sources of soybeans over the last couple of decades to reduce their reliance upon the United States. This reduces the leverage of the U.S. - and U.S. soybean farmers - every time words fail and demand is withheld.

Brazilian soybean exports to China surged to 70 percent in 2012. They hit a peak of 82 percent in 2018, during the U.S.-China trade war. In 2013, Brazil passed the U.S. to become the world’s largest exporter of soybeans thanks to China’s demand. This year, China is buying even more soybeans from Brazil than they usually would, as part of their effort to resist buying from U.S. sources.

But Brazil isn’t the only soybean competition the U.S. faces on the world stage. Argentina is in the mix as well.

In October, Argentina announced that they would cut their export taxes on soybeans and other grains for a short, 3-day window. During that time, China made huge purchases from them. At first glance, all is fair in love and war - why shouldn’t Argentina seize the opportunity? 

Many U.S. businesses would like to reshore manufacturing production to the United States, or at least move it out of China.

Ironically, China used to be the world’s biggest producer of soybeans. Somehow, the United States managed to get that away from them - until 2013 when Brazil took the lead with China’s help.

According to a History of Soybean Production and Trade in China (1949-1980s), in 1933, China and Manchuria (an independent nation at the time) produced 87 percent of the world’s soybeans. Production plummeted in the late 1950s and 1960s as Chinese society was reorganized again and again. China first imported soybeans from the U.S. in 1977, and after that, they were a net importer of soybeans every year but one.

Ironically, 2025 has been a great production year for U.S. soybean farmers, so they have more than their usual crop to try and sell or store. What will happen to these producers long term?

Farmers and industry representatives, as well as members of the Trump Administration are traveling the world, trying to find demand to close the gap created by China’s decision to walk away. Ironically, China’s decision to buy predominantly from Brazil has driven up the cost of their soybean supply, so the U.S. may be able to present itself as a cost competitive alternative.

Others have floated the idea of biomass-diesel production, turning soybean byproducts into fuel, but it will take years for demand to rise to the point where it cancels out China’s demand, if it is possible at all.

This is ultimately a matter of supply, demand, and covering your backside. China recognized that they were overly dependent on the U.S. for soybeans, and took active steps to develop new markets for themselves to buy from. Whether the U.S. recognized they were overly dependent on China’s demand or not, they didn’t take the same active steps. That has left not just farmers, but fertilizer producers, farming equipment manufacturers, and transportation providers all hanging in the lurch.

By Kelly Barner

Keywords: Supply Chain

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