Oilseeds. World Markets and Trade – USDA Sept. 12, 2014
South American Soybean Oil Export Growth Limited by Growing Biodiesel Production
Growing industrial use of soybean oil, primarily biodiesel production in Argentina and Brazil, is reducing South America’s ability to meet increasing global demand. The proportion of soybean oil used in fuel/industrial applications is forecast to double from around 17 percent in 2008/09 to over one-third in 2014/15. In contrast, exports are forecast to fall from more than half of total use to just over 40 percent over the same period. Domestic food use has maintained a relatively constant proportion.
Several factors are responsible for the increase in biodiesel production. For Brazil, with a large domestic market, successive increases in the blending mandate have been a key factor. For Argentina, with a relatively smaller domestic market, the focus has been on export demand. This has largely been driven by positive margins for biodiesel that have improved as soybean oil prices have slid relative to crude petroleum.
Despite the smaller proportion of soybean oil exported from the region, the volume has increased annually over the past several years, owing to greater supplies. Soy oil prices are at their lowest levels in four years, which will help stimulate global demand. Limited export growth from South America will likely encourage buyers to either seek out other sources such as the United States or Europe, or alternatively substitute competing vegetable oils.
Short Indian Crop and Strong Domestic Use Decimate Soybean Meal Exports
India’s smaller soybean harvest in 2013/14 has reduced supplies of soybean meal. Meanwhile, domestic consumption continues to rise, spurred by increasing production of poultry meat, eggs, dairy, and aquaculture. Hampered by limited supplies and high prices, soybean meal exporters have had to cut back on foreign sales. Consequently, domestic use has exceeded exports for the first time in more than three decades. With a similar harvest forecast for 2014/15, this scenario is likely to be repeated.
With soybean meal exports forecast to reach only 3 million tons in 2014/15 (a third lower than just a few years ago), traditional buyers are having to adjust. Pakistan is purchasing increasing quantities from Argentina while several countries in East and Southeast Asia are buying more from China. Many have also looked to the United States, pushing early season sales to a record. Other countries such as Bangladesh are opting to import soybeans, choosing to use domestic processors to produce meal and oil.
For 2014/15, global soybean production is up sharply driven by record crops for Argentina, Brazil, and the United States. Global trade is larger with stronger imports mainly by China and the EU.
Global trade for soybean meal is also up with larger exports from Brazil and China, while down for oil due to growing biodiesel production in Argentina and Brazil. The season average U.S. farm price is lowered.
For 2013/14, global soybean production is reduced with a smaller crop in Brazil. World trade is marginally higher, driven by Brazil and the United States. Global soybean meal trade is lower as a reduction in Argentine exports more than offsets gains for Brazil, China, and South Korea. Global soybean oil trade is down with reduced exports by Argentina. The season average U.S. farm price is unchanged.
U.S. export bids, FOB Gulf, in August averaged $476 per ton, down $20 from last month, pressured by the prospect for a big crop in the Fall.
As of the week ending August 28, 2013/14 U.S. soybean commitments (outstanding sales plus accumulated exports) to China totaled 27.9 million tons compared to 21.6 million a year ago. Total commitments to the world are 45.9 million tons, compared to 37.2 million for the same period last year.
2014/15 TRADE OUTLOOK
• United States
o Soybean exports are up 680,000 tons to a record 46.3 million on larger supplies.
o Soybean meal exports are up 227,000 tons to 10.9 million on record new crop sales.
o Rapeseed imports are up 150,000 tons to 900,000 on stronger crush.
o Rapeseed oil imports are cut 150,000 tons to 1.6 million on larger production.
o Palm oil imports are cut 136,000 tons to 1.3 million on expected weaker demand growth.
o Soybean meal exports are cut 300,000 tons to 29.2 million on expected weaker growth.
o Soybean oil exports are cut 170,000 tons to 4.5 million as processors divert increasing amounts of oil to biodiesel.
• Australia’s rapeseed exports are cut 150,000 tons to 2.3 million on reduced EU demand.
• Bangladesh’s soybean meal imports are cut 125,000 tons to 300,000 on limited exportable supplies and continued high prices for Indian meal.
o Soybean imports are up 100,000 tons to 600,000 on continued demand by processors.
o Soybean exports are up 1.7 million tons to 46.7 million on larger supplies.
o Soybean meal exports are up 300,000 tons to 14.1 million, supported by a growing crush and strong demand.
• Canada’s soybean exports are cut 100,000 tons to 3.6 million on a reduced crop.
o Soybean imports are up 1.0 million tons to 74.0 million on prospects for lower prices.
o Soybean meal exports are up 200,000 tons to 1.7 million reflecting continued strength in regional demand.
o Soybean oil imports are cut 200,000 tons to 1.1 million on reduced exports by Argentina.
o Rapeseed oil imports are up 100,000 tons to 1.4 million to partly offset the reduction in soybean oil imports.
o Peanut exports are cut 100,000 tons to 400,000 on a reduced crop.
• European Union
o Soybean imports are up 250,000 tons to 12.8 million on prospects for lower prices.
o Rapeseed exports are up 100,000 tons to 500,000, while imports are cut 200,000 tons to 2.6 million on a record crop.
• India’s imports of palm oil are up 100,000 tons to 8.8 million on stronger demand.
• Indonesia’s palm kernel oil exports are reduced 100,000 tons to 1.7 million on stronger use.
• Japan’s soybean imports are up 100,000 tons to 2.9 million on prospects for lower prices.
• Malaysia’s palm oil exports are raised 300,000 to 18 million on larger supplies.
• Paraguay’s soybean meal exports are cut 100,000 tons to 2.6 million in response to reduced exportable supplies.
• Philippines’s soybean meal imports are up 100,000 tons to 2.4 million reflecting stronger growth in feed demand in response to expected lower prices.
• Russia’s imports of palm oil are raised 100,000 tons to 775,000 on stronger demand.
• Thailand’s soybean meal imports are cut 250,000 tons to 3.1 million on reduced purchases from India.
• Ukraine’s soybean exports are cut 200,000 tons to 1.6 million to reflect the import ban by Russia, the second largest market after the EU.
• Vietnam’s soybean imports are up 100,000 tons to 1.6 million on prospects for lower prices.
2013/14 TRADE OUTLOOK
o Soybean meal exports are cut 1.3 million tons to 25.7 million on slowing trade.
o Soybean oil exports are reduced 210,000 tons to 4.2 million on trade trends and growing production of biodiesel.
• Bangladesh’s soybean meal imports are cut 162,000 tons to 258,000 on reduced purchases from India.
o Soybean exports are boosted 100,000 tons to 46.4 million on trade trends.
o Soybean meal exports are up 300,000 tons to 14.1 million on strong exports to date.
• Canada’s rapeseed exports are up 273,000 tons to 9.2 million on stronger late-season shipments.
o Soybean meal exports are up 150,000 tons to 2.1 million on continued strong demand.
o Rapeseed imports are up 300,000 tons to a record 4.7 million on stronger crush.
• India’s soybean meal exports are cut 100,000 tons to 2.8 million on limited late-season trade.
• Indonesia’s palm kernel oil exports are cut 150,000 tons to 1.6 million on strong domestic use.
• Japan’s rapeseed imports are trimmed 100,000 tons to 2.4 million on trade to date.
• Korea’s soybean meal exports are up 120,000 tons to 170,000 reflecting larger trade volume to Japan.
• Pakistan’s soybean meal imports are up 200,000 tons to 910,000 on large shipments from Argentina.
• Philippines’s soybean meal imports are up 100,000 tons to 2.3 million on trade to date.
• Thailand’s soybean meal imports are cut 300,000 tons to 2.9 million on the slow pace to date