Core Viewpoint - The recent surge in Brazilian soybean prices has led to a halt in purchases by Chinese buyers, raising questions about the reasons behind the price increase and the strategies employed by China in response to this situation [1][2]. Price Dynamics - On October 17, Brazilian soybeans were quoted at $2.8-$2.9 per bushel, significantly higher than the U.S. soybeans at $1.7, marking a 70% increase in the price difference, the highest in 30 years [4]. - The cost of processing Brazilian soybeans has exceeded the selling price by over 200 RMB per ton, leading to a 40% drop in soybean arrivals at northern ports within a week, forcing many oil mills to suspend procurement [6]. Supply Chain Disruptions - Severe weather events, including 20 days of continuous rain in Mato Grosso and drought in Rio Grande do Sul, have resulted in a 15% and 8% reduction in soybean yields, respectively [8][9]. - A strike by port workers in Espírito Santo state has blocked 800,000 tons of soybeans, increasing logistics costs by $15 per ton [11]. Strategic Timing - China is strategically waiting for two key moments: the peak supply period of new Brazilian soybeans expected in late January to early February, and developments in U.S.-China trade negotiations [12][14]. - The USDA projects an increase in Brazil's soybean planting area to 48.2 million hectares, with a record production of 177.6 million tons anticipated for the 2025/26 season [14]. Alternative Supply Sources - In September, China imported 1.3 million tons of soybeans from Argentina, a 45% increase year-on-year, and has also started receiving stable supplies from Russia and Kazakhstan [22]. - China's state reserves of 45 million tons can support over three months of consumption, providing a buffer against irrational price increases [22]. Industry Adjustments - Feed companies have adjusted their formulations, reducing soybean meal usage from 20% to below 15%, which could lead to a decrease in soybean imports by 11 million tons annually [23]. Conclusion - The current price increase by Brazilian traders reflects an overextension of short-term supply-demand dynamics, signaling the end of a monopolistic pricing strategy. China holds significant leverage with clear timelines and strategies to mitigate the impact of high prices [25][27].