Soybean Trade Growth: A Story of Brazil, the United States, and China

Over the past 2 years, global soybean exports have risen 20 million tons, supplied exclusively from Brazil and the United States. This pattern of export growth reflects the dominance of both countries in production and trade as well as the buying patterns in China which accounts for nearly two-thirds of global soybean trade.

The share of export growth captured by Brazil and the United States varies from year to year depending on relative prices and the quantity of exportable supplies. Over the past 5 years, Brazil has captured a greater share of global export growth, 49 percent versus 40 percent for the United States. This trend reflects Brazil’s larger production growth and smaller domestic market for soybean products. On the demand side, China remains the driver in soybean trade based entirely on the magnitude of its consumption. With that said, growth in demand in markets outside China and the EU have also been strong on a percentage basis. Increased supplies of rapeseed, sunflowerseed, and grains in the EU have slowed the demand for imported soybeans in recent years.

Over the next year, USDA’s forecast calls for global soybean demand to continue expanding, with imports rising 5 million tons to nearly 149 million tons. While emerging markets such as Egypt, Pakistan, and Vietnam are forecast to have strong growth in their imports, China is still forecast to account for more than half of the increase in demand, albeit at a slower growth rate. Given the recent trend in exports, it is likely that this increase in global demand will be split between the United States and Brazil, with export shares dependent upon relative availability of supplies in each country.

OVERVIEW

2017/18

Global oilseed production is forecast lower this month at 577 million tons. Reduced soybean and sunflowerseed production primarily in Russia and Ukraine, and lower rapeseed production in the United States, offset higher global cottonseed and peanut production. Cottonseed crop prospects are higher for Argentina and Brazil, offset by a reduction in the United States, while the peanut production estimate is raised for China. Global soybean imports are down slightly this month on reductions for the European Union that surpass gains in Pakistan. Exports are down due to a lower Ukraine soybean export forecast, and lower projections of Russia and Ukraine sunflowerseed exports. Global soybean ending stocks are lowered this month as strong export demand in 2016/17 reduces 2017/18 carryin. The U.S. season-average farm price for soybeans is unchanged at $9.20 per bushel.

2016/17

Global oilseed production is raised this month as higher sunflowerseed output in Ukraine more than offsets lower in global soybean and peanut production. Global soybean imports are raised this month on larger shipments to China, Argentina, Pakistan, and Russia, exceeding reductions in the European Union. Exports are estimated higher this month on larger shipments from Brazil and Argentina. Final trade data shows U.S. soybean exports to be a record. The U.S. season-average farm price for soybeans is finalized at $9.47 per bushel.

SOYBEAN PRICES

U.S. export bids in September, FOB Gulf, averaged $379/ton, up $7 from the previous month. In comparison, FOB Brazil Paranagua and FOB Argentina Up River averaged $384/ton and $378/ton, up $6 and $11 from last month, respectively. Following strong global import demand as well as early season weather issues in South America, prices have trended higher in September. However, harvest pressure and farmer selling have helped pressure prices lower into early October.

For the week ending September 28, U.S. 2017/18 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 10.7 million tons compared to 12.6 million a year ago. Total commitments to the world are 23.3 million tons, compared to 28.3 million for the same period last year.

2017/18 OUTLOOK CHANGES

  • Australia rapeseed exports are down 100,000 tons to 2.5 million on tighter supplies.
  • European Union
    • Rapeseed imports are lifted 200,000 tons to 4.2 million following strong early season shipments from Ukraine.
    • Soybean imports are cut 500,000 tons to 14.0 million in line with reductions for 2016/17 as well as larger-than-expected rapeseed imports from Ukraine.
  • India sunflowerseed oil imports are down 100,000 tons to 1.7 million on lower global supplies.
  • Indonesia palm oil exports are raised 700,000 tons to 26.2 million on higher carryover stocks and competitive pricing.
  • Pakistan
    • Rapeseed imports are down 100,000 tons to 1.1 million, and soybean imports are up 280,000 tons to 2.0 million, both on a growing preference for locally processed soybean meal.
  • Russia
    • Sunflowerseed exports are slashed in half to 100,000 tons following a lower production estimate.
    • Sunflowerseed meal exports are lowered 100,000 tons to 1.5 million on lower crush.
  • Ukraine
    • Rapeseed exports are up 350,000 tons to 1.7 million on a stronger pace of trade at the beginning of the marketing year.
    • Rapeseed meal exports are slashed 200,000 tons to 215,000 and rapeseed oil exports are down 135,000 tons to 150,000, both following a reduced crush estimate.
    • Sunflowerseed exports are down 100,000 tons to 150,000 reflecting a lower production estimate.
    • Sunflowerseed oil exports are lowered 100,000 tons to 5.2 million, on lower crush.
    • Soybean exports are cut 450,000 tons to 2.5 million on a smaller production estimate.

2016/17 TRADE CHANGES (on trade data unless specified otherwise)

  • United States
    • Soybean exports are up 99,000 tons to a record 59.2 million.
    • Soybean meal exports are down 90,000 tons to 10.6 million.
  • Argentina
    • Soybean exports are up 400,000 tons to 6.9 million.
    • Soybean imports are up 200,000 tons to 1.7 million.
    • Soybean meal exports are up 350,000 tons to 31.6 million.
  • Brazil
    • Soybean exports are boosted 637,000 tons to 63.1 million.
    • Soybean oil exports are lowered 130,000 tons to 1.2 million.
  • Burma palm oil imports are down 109,000 tons to 671,000.
  • China
    • Soybean imports are boosted 500,000 tons to 92.5 million.
    • Soybean meal exports are down 100,000 tons to 1.2 million.
    • Fish meal imports are up 100,000 tons to 1.4 million.
  • Egypt
    • Soybean imports are up 100,000 tons to 2.3 million.
    • Soybean meal imports are reduced 200,000 tons to 1.2 million.
    • Soybean oil imports are cut 130,000 tons to 270,000, while palm oil imports are raised
  • 100,000 tons to 1.3 million.
  • European Union
    • Soybean imports are lowered 300,000 tons to 13.2 million.
    • Sunflowerseed meal imports are down 100,000 tons to 3.7 million.
  • India
    • Soybean oil imports are down 200,000 tons to 3.5 million.
    • Sunflowerseed oil imports are up 100,000 tons to 2.0 million.
    • Peanut exports are lowered 100,000 tons to 950,000.
  • Indonesia palm oil exports are boosted 1.0 million tons to 26.0 million.
  • Iran palm oil imports are up 100,000 tons to 500,000.
  • Malaysia palm oil exports are reduced 149,000 tons to 16.3 million.
  • Pakistan rapeseed imports are down 200,000 tons to 1.0 million, while soybean imports are raised 209,000 to 1.7 million.
  • Peru fishmeal exports are up 100,000 tons to 1.1 million.
  • Philippines palm oil imports are up 100,000 tons to 1.0 million.
  • Russia
    • Sunflowerseed meal exports are reduced 100,000 tons to 1.3 million.
    • Soybean imports are raised 200,000 tons to 2.2 million.
  • Singapore palm oil imports are lowered 100,000 tons to 350,000.
  • Ukraine
    • Sunflowerseed meal exports are down 100,000 tons to 4.8 million.
    • Sunflowerseed oil exports are up 195,000 tons to 5.8 million.