CHINA will revert to its normal level of US soyabean purchases. That was the triumphant message after the meeting between US President Donald Trump and Chinese President Xi Jinping on October 30.

But so far, the flow of soyabeans from the US to China has been no more than a trickle — and these volumes pale in comparison to what China is still importing from Brazil.

The White House said on November 1 that China agreed to buy 12m tonnes of US soyabeans by the end of this year, then 25m tonnes in each of the next three years, on par with pre-trade-war levels.

Unless there’s a flood of sales in the next three weeks, China won’t make the first deadline.

US Treasury Secretary Scott Bessent walked back the timetable on Wednesday, stating that the initial 12m-tonne target will be hit by the end of February. US President Donald Trump announced a $12bn bailout for US farmers on Monday, a tacit acknowledgement that export flows are being hit by trade policies.

The larger question for dry bulk shipping: Will the US-China soyabean trade actually normalise in the years to come, or was it an empty promise? Will export sales to date turn out to be a token gesture?

‘Progress is slow’

The US Department of Agriculture has reported 2.6m tonnes of US soyabean sales to China since the trade deal was announced.

“At the moment, progress is slow and we’re well behind the levels we’ve previously seen,” said Derek Langston, global head of dry bulk research at Braemar, during the Breakwave Day forum on Thursday.

“I’d say we’re looking short — even of the 12m tonnes. That is particularly significant, because US farmers need to be able to plan ahead and have some security in terms of buying fertilisers, fungicides and herbicides. They need to know what to expect next year,” said Langston.

China doesn’t need the volumes cited in the trade deal. It has successfully replaced most of the US trade with soyabeans from Brazil and Argentina. Soyabean inventories at Chinese ports are currently at record highs.

China continues to buy more soyabeans from South America, supporting dry bulk shipping demand on that route.

Brazilian soyabean exports totalled 4.2m tonnes in November, up 64% year on year (y/y), according to a broker report. November volumes were driven by shipments to China.

Exports in December are projected to be 2.8m tonnes, up 90% y/y, “extending strong late-season performance despite the typical year-end slowdown”.

Brazil is expected to export a total of 110m tonnes of soyabeans this year, up 13% y/y, “driven by higher production and sustained Chinese demand”, said the broker.

How US exports impact bulker demand

Reuters reported that seven bulkers have loaded or are en route to load US soyabeans or sorghum.

According to Bloomberg, six vessels are due to load a total of over 320,000 tonnes of soyabeans in the US Gulf during the coming weeks.

Such news has offered a glimmer of hope to America’s beleaguered soyabean famers, but this shipping activity is a fraction of normal levels.

The US Department of Agriculture publishes detailed data on export cargo inspections. This data captures the vast majority of shipments, although not all of them. Inspection data doesn’t give exact export numbers, but it’s a good proxy for trade trends.

USDA cargo inspection data shows no soyabean exports to China since late May. The only US cargoes to China it lists since the trade deal are two container loads of sorghum that loaded in late November.

China’s aversion to US soyabeans has not been a negative for dry bulk shipping for two reasons.

First, US corn exports have surged, more than offsetting soyabean losses. Second, the voyage from Brazil to China is longer than from the US Gulf, so China’s shift to South America has been positive for tonne-miles.

Export volumes covered by USDA cargo inspection data totalled 126.9m tonnes in January-November, up 6% y/y. This is despite a plunge in volumes to China of 24.1m tonnes or 80%.

US soyabean exports are down 10.8m tonnes or 25% year to date (YTD), but this has been more than offset by an increase in US corn exports of 19.5m tonnes or 38%.

Looking at export flows by transport mode, US crop exports carried by bulkers total 102.3m tonnes YTD, up 7% y/y. Cargoes carried by rail or truck (almost all going to Mexico) are at 19.6m tonnes, up 8% y/y, and containerised exports are at 5m tonnes, flat y/y.

However, the YTD numbers are deceiving when it comes to US-China trade effects.

The US soyabean export season generally runs from October-February, with volumes peaking in October-November. This is when the trade fallout shows. The YTD outperformance is primarily driven by volumes prior to the soyabean season.

Soyabean export volumes typically peak at 2.6m tonnes per week in the second half of October. This year they peaked in mid-October at just 1.6m tonnes per week.

Comparing this year’s October-November volumes with last year’s shows the extent of the drop.

Total grains exports transported aboard bulkers totalled 20.2m tonnes over the past two months, down 4.8m tonnes or 19% y/y.

The fall would have been much worse if not for corn exports, which are still going strong at a time of year when they should be declining. US corn exports carried on bulkers totalled 9.8m tonnes in October-November, up 4.6m tonnes or 89% y/y.

US soyabean exports via bulkers plunged to 7.2m tonnes in October-November, down 9.8m tonnes or 58% y/y.

Last year, the US exported 17m tonnes of soybeans during the two-month peak period, including 11.5m tonnes to China, representing 68% of the total. China volume fell to zero this October-November, with incremental flows to other destinations making up for only 1.7m tonnes of the loss to China.

On one hand, that’s bad for bulker tonne-miles, because most of the remaining soyabean shipments are heading to buyers in Latin America and Europe, not Asia. The loss of China volumes not only reduces volumes, it shortens average voyage distances.

On the other hand, bulker operators are still more than compensating for tonne-mile losses on the US side by transporting more soyabeans to China from Brazil.