China's Private Soy Crushers Face Fourth-Quarter Squeeze as 10% Tariff Bites

Key Facts

China's private soybean crushers face tighter supplies and higher costs in the fourth quarter as Brazilian availability declines and an additional 10% tariff remains on U.S. imports. The pressure comes as processors contend with negative crush margins and weakening feed demand.

Importers have largely completed their October purchases and booked 4.8 million tons for November, equal to about 60% of projected demand for that month, while buying for December and January has barely begun. Brazil's next crop will not become available until early 2027, narrowing the window for alternative supply.

Brazilian soybeans for November shipment were offered at a premium of $3.15 to $3.20 a bushel over the Chicago November contract, including cost and freight to China. Comparable U.S. Gulf cargoes were offered at $3.20 to $3.25 a bushel before tariffs.

Market estimates indicate that crushing October-to-January cargoes would remain unprofitable even without the 10% tariff. Theoretical losses on Brazilian and U.S. soybeans for October-to-December shipment were about 150 to 230 yuan, or $22.35 to $34.27, per ton.

Chinese state traders bought about 11 million tons of U.S. soybeans after the presidents' May meeting, but private crushers have largely avoided U.S. cargoes because of the tariff. The distinction means the squeeze is concentrated in private processors' commercial economics rather than representing a complete absence of soybeans in China.

In Brazil, farmers had sold 82% of the 2025/26 crop by the end of July, compared with 78% a year earlier, and Safras & Mercado estimated that the share later approached 85%. Brazilian loadings to China through August 25 were also down 2.6 million tons from a year earlier, while shipments to other destinations increased by 6 million tons.

Margins face an additional drag from weaker feed demand. China's pig herd is expected to shrink in the fourth quarter as Beijing seeks to reduce inventories and animal weights in an oversupplied market, limiting crushers' ability to pass higher bean costs through to processed products.

China retained an additional 10% tariff on U.S. imports for a year from November 10, 2025. Its Commerce Ministry said in July 2026 that the countries had agreed in principle to include relevant agricultural goods in a reciprocal tariff-reduction framework, but gave no implementation timetable; tariff policy and any Sinograin reserve auctions therefore remain key to private crushers' ability to keep plants operating in the months ahead.