Producers Face New Reality in the Global Soybean Market

African Swine Fever (ASF) in China will be a game changer for the global oilseed complex, and soybeans in particular, in the coming years. China’s Ministry of Agriculture and Rural Affairs reporting that the pig herd has declined by 20 percent since ASF was first reported in early August 2018, and China’s feed demand and soybean imports are projected to fall dramatically from earlier forecasts. Based on USDA’s import forecast for China from May 2018, and trend forecasts using earlier USDA baseline forecasts as a guide, the global soybean market faces a potential 42 million ton accumulated decline in China’s import demand through the 2019/20 year. The loss for 2018/19 is projected to reach 17 million tons with 2019/20 losses totaling 22 million tons. The 3 million ton decline in 2017/18 from USDA’s initial forecast is related to China’s reduction in soybean meal in feed rations prompted by the current trade engagement with the United States.

With declines in China’s imports and crush for 2018/19 and little recovery in demand expected in the coming year, there will be limited opportunity for U.S. producers to see any appreciable draw-down in soybean stocks. And with a recovery in Argentina’s soybean output, Chinese buyers will have additional supplies to access outside of the United States compared to last year. Consequently, large global supplies and lower demand in China will continue to pressure soybean prices; a situation that will likely continue as the industry adjusts to ASF. This is a far cry from the market dynamics producers experienced since the mid-2000’s and will require adjustments by producers to remain profitable in a lower priced market.


Global oilseed production for MY2018/19 is forecast higher this month at 601.0 million metric tons (tons) compared to 595.0 million in April. Higher peanut and soybean production levels accounted for the largest increases. Global peanut production is up 4.0 million tons with greater area harvested in Sudan producing higher output. Argentine soybean production is up on higher yields. Global oilseed crush declines by 1.4 million tons, and oilseed trade falls around 1.3 million tons due to continuing trade issues between China and Canada as well as China and the United States. Global oilseed stocks grow by 6.7 million tons mainly due to the reduction of U.S. soybean exports. Global meal trade is slightly lower this month due to a 1.2 million ton reduction in Argentine soybean meal caused by a lower supply available to crush resulting from last year’s drought. Global vegetable oil trade is slightly higher on increased demand for palm oil imports by China and the European Union in addition to a decline in Chinese soybean crush and oil output. The U.S. season-average farm price projection for soybeans is reduced by $0.05 to $8.55 per bushel.


Global oilseed production for MY2019/20 is projected to decline 0.5 percent, a significant departure from the 3.5 percent average growth observed over the previous 5 years. Soybean production, which accounts for 60 percent of global oilseed production, is projected to decline 1.7 percent, mostly on reduced output in the United States. In contrast, global oilseed consumption is expected to rise 2 percent in 2019/20, similar to the current year yet below the 3.3 percent average annual growth seen in the proceeding 5 years. Low oilseed prices and the expected increase in meat production, driven in part by stronger demand for meat imports by China will partially offset the expected decline in demand for protein meals in China. A complete summary of the 2019/20 global oilseed and product forecasts will be published in the June 2019 Oilseeds: World Markets and Trade Report on June 11, 2019.


U.S. soybean export bids in April, FOB Gulf, averaged $340/ton, down $11 from March. Brazil Paranagua averaged $336/ton, down $8 from March. Argentina Up River FOB averaged $319/ton, plummeting $16 from last month. U.S. soybean meal export bids (FOB Gulf) in March averaged $344/ton, up $2 from March. Brazil Paranagua FOB averaged $315/ton, down $4 from March while Argentina Up River FOB averaged $313/ton, down $7 from the previous month.

The export price spread between U.S. and Argentine soybeans has widened over the past month with the onset of the Southern Hemisphere harvest. Prices trended downward for both Argentina and Brazil, with all three export competitiors dropping $20/ton or more from last month. Higher U.S. prices relative to South America are in stark contrast to last September to November when U.S. bids were at a nearly $100/ton discount. Moreover, the price situation has also reversed itself compared with last year at this time. Argentine bids are more than $110 /ton lower than in May 2018 as severe drought depleted exportable supplies and stronger global demand kept all prices elevated.

For soybean meal, the price spread between U.S. and South American origin has risen over the past month with U.S. premiums running $23/ton and $21/ton higher than Argentine and Brazilian meal in early April.

Uncertain trade prospects and African Swine Fever have instilled significant headwinds to global demand, especially in China. In addition, favorable weather for U.S. plantings and South American harvests, in addition to near-record U.S. stocks for 2 consecutive years will lead to greater supplies and also contribute to price pressure.


For the week ending May 2, 2019, U.S. 2018/19 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 13.3 million tons compared to 28.7 million a year ago. Total commitments to the world were 45.0 million tons, compared to 55.1 million for the same period last year. Accumulated soybean exports were at 32.9 million tons, down over 11.0 million from last year. Accumulated soybean exports to China were at 5.9 million tons, over 20 million lower compared to last year. Shipments to the rest of the world were at 20.0 million tons, nearly 6 million above last year for the same period.