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Subtract China and the Soy Export Market Goes Flat
The world market for soybeans nearly doubled in a 10-year span, growing at an average 7.5 million tonnes a year through 2018, say USDA analysts in the monthly Oilseeds: World Markets and Trade report. But the go-go days of growth may be over, due to retrenchment in China, the dominant buyer.
Soybean exports are forecast at 149 million tonnes during the 2019/20 trade year, little changed from the current year and down nearly 3% from 2017/18. For China, the drop is more severe – 10% – from the figure recorded before the Sino-U.S. trade war began in earnest in 2018. Besides the effects of the trade war, China has lost millions of pigs in a hog-disease epidemic, reducing the need for soybeans used in livestock feed.
“If not for the increase in demand from other markets, spurred in part by lower prices, the current trend in global soybean trade would have turned negative,” said the Oilseed report. “Consequently, this slowing demand, coupled with large crops and stock building, has led to soybean prices running 10% below even a few years ago. Given the potential for slow demand growth in China, rising soybean production in Brazil and extensive stocks primarily in the United States, the prospect for soybean prices again approaching $10 a bushel ($370/tonne) is greatly diminished.”
The last time the season average price for U.S. soybeans topped $10 a bushel was five years ago. The USDA estimates that this year’s soybean crop will sell for an average $8.40 a bushel, lowest since the 2006 crop.