China's recent soymeal glut is raising doubts about demand just as the U.S. approaches its peak soybean export season. Trade insiders say that despite historically high soybean imports earlier this year, China has not yet committed to major U.S. shipments for the fourth quarter of 2025. This hesitancy reflects ballooning soymeal inventories, sluggish feed demand, and ongoing U.S.-China trade tensions.

The soymeal surplus has already disrupted domestic markets. Spot soymeal prices in northern China have fallen to 2,925 yuan ($408) per metric ton, a 6.5% year-over-year drop, according to Wang Wenshen of Sublime China Information. Chinese soymeal futures fell for the fourth straight session on July 29. Meanwhile, Chicago soybean futures are already under pressure due to expectations of a record U.S. harvest.

"If third-quarter prices stay weak and crushers face losses, fourth-quarter soybean purchases may fall short of expectations," warned Wang. That period, from October to December, traditionally represents the heart of U.S. soybean marketing.

China's total soybean imports hit a record high in May and remained strong in June, feeding a spike in oilseed processing. However, this has led to storage challenges, with crushing plants in southern China shutting down due to overstocked soymeal.

"Small-scale shutdowns have already begun," said a Shanghai-based trader, adding that broader suspensions are "highly likely." In Rizhao, the country's main soy processing hub, crush margins have been negative since mid-May.

Feed demand remains low, further compounding the problem. China's pork consumption has slowed, prompting the government to announce cuts to breeding sow numbers, restrict new production capacity, and reduce soymeal use in animal feed.

These factors are expected to exert long-term downward pressure on soymeal consumption. According to Cheang Kang Wei of StoneX, crushers could face "huge soymeal stock pressure" over the next two months.

In an added twist, China has been purchasing Argentine soymeal in recent weeks, even though U.S. soybean tariffs remain high. A Singapore-based trader noted, "Even with big local supply, it's profitable to import meal from Argentina. This will only add to the stocks."

Hope remains that trade talks in Stockholm could revive U.S. exports. "If a trade deal is reached, Chinese buyers could resume U.S. purchases for the fourth quarter, as prices are favorable without tariffs," said Johnny Xiang of AgRadar Consulting.

The stakes are high as the U.S. prepares for the busiest part of its soybean export calendar. Global traders are watching closely for any resolution that could unblock the flow of U.S. soybeans into China.

Related Graphic: China's record soybean imports https://fingfx.thomsonreuters.com/gfx/ce/xmvjenjdbpr/Weixin%20Image_20250729115855_3.png