By Ella Cao, Naveen Thukral and Roberto Samora
BEIJING/SINGAPORE/SAO PAULO Sept 7 (Reuters) - China's private soybean processors face a costly fourth-quarter supply squeeze as inventories tighten in top
exporter Brazil and tariffs keep U.S. cargoes largely out of reach.
The world's biggest oilseed processing industry is already under pressure from negative margins and weakening feed demand as China's pig herd shrinks. Processors are hoping President Xi Jinping's visit to Washington this month leads Beijing to ease a 10% import tariff on U.S. agricultural goods.
U.S. Trade Representative Jamieson Greer said on Thursday that both countries would make "some announcements on agriculture and non-tariff barriers" during the summit, without providing specifics.
"As South America nears the end of its marketing season, private crushers will need access to U.S. soybeans," said Johnny Xiang, founder of AgRadar Consulting based in Beijing.
"That will depend either on tariff reductions or, failing that, on Sinograin reserve auctions to keep their plants operating," he said, referring to China's state stockpiler.
Any relief, however, remains uncertain.
"We are not considering U.S. soybeans because of the tariffs," said a China-based crusher. "If tariffs are reduced, we will recalculate crush margins to assess whether U.S. cargoes would be profitable."
China's state-owned traders bought about 11 million metric tons of U.S. soybeans after Xi's May meeting with U.S. President Donald Trump, according to traders. Private crushers, however, have largely avoided North American cargoes because of tariffs.
Reuters has sought comment from China's commerce ministry.
RISING PRICES, NEGATIVE MARGINS
Benchmark U.S. soybean futures have risen nearly 12% from their June lows, supported by adverse U.S. weather, Chinese state buying and expectations that El Nino weather could curb global supplies.
Brazilian soybeans for November shipment were quoted at a premium of $3.15 to $3.20 a bushel to the Chicago Board of Trade November soybean contract, including cost and freight to China. Comparable U.S. Gulf cargoes were offered at $3.20 to $3.25 a bushel, excluding tariffs.
Although U.S. soybeans are priced above Brazilian supplies, buyers expect the U.S. harvest in coming weeks to increase availability and weigh on prices.
"The ultimate price of U.S. soybeans remains highly uncertain, as large-scale buying inquiries from China have yet to emerge," said Xiang.
Brazil's next harvest is not due until early 2027.
Even without the 10% tariff, imports of U.S. beans for October-through-January shipment would generate negative crush margins at current prices, according to Rosa Wang, an analyst at Shanghai JC Intelligence Co. and three other traders and analysts.
"Theoretical crush margins for Brazilian and U.S. soybeans, excluding an additional 10% tariff, were 150 to 230 yuan ($22.35 to $34.27) per ton in the red for October-December shipments," Wang said.
China's pig herd is expected to shrink in the fourth quarter as Beijing intensifies efforts to reduce inventories and limit hog weights in a bid to stabilise an over-supplied market.
Importers have largely completed October purchases and have booked 4.8 million tons for November, around 60% of projected demand, while buying for December and January has barely begun, two Asia-based traders said.
LIMITED BRAZILIAN SUPPLY
Brazil has limited scope to boost fourth-quarter sales to China because of demand from other buyers and strong domestic crushing activity, two Brazilian analysts said.
Farmers had sold 82% of the 2025/26 crop by the end of July, versus 78% a year earlier, and that figure is likely close to 85% now, according to Safras & Mercado analyst Rafael Silveira.
Domestic crushers have competed with exporters, at times paying above export parity prices, he said.
Brazil's soybean loadings to China through August 25 were down 2.6 million tons from a year earlier, while shipments to other destinations rose by 6 million tons, said Eduardo Vanin, senior agriculture strategist at Marex in Curitiba.
Argentina supplied an additional 7.9 million tons of soybeans to China in 2025, up 92.4% from 2024, according to Chinese customs data, but that buffer is expected to diminish in 2026 without similar policy incentives.
($1 = 6.7106 yuan)
(Reporting by Ella Cao in Beijing, Roberto Samora in São Paulo, Naveen Thukral in Singapore and Maximilian Heath in Buenos Aires. Editing by Mark Potter)
