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Published October 07, 2013, 10:25 AM

Soybeans' ups and downs

In contrast to corn where U.S. exports have generally been flat since hitting a peak between 1979 and 1981, U.S. soybean exports have generally trended upward over time.

By: Daryll E. Ray and Harwood Shaffer, Agweek

In contrast to corn where U.S. exports have generally been flat since hitting a peak between 1979 and 1981, U.S. soybean exports have generally trended upward over time.

The U.S. exported 5.8 million metric tons of soybeans in 1964, passed the 10 million metric ton threshold in 1969, the 20 million metric threshold in 1978 falling below that level in seven of the next 27 years before passing the 30 million metric ton level in 2006 and the 40 million metric ton level three years later in 2009. With a drought-reduced crop, 2012 U.S. soybean exports were 35.8 million metric tons.

But that is not the complete export story. For one thing, soybean meal and soybean oil should be considered, as well as soybeans. Together the three make up the soybean complex. Secondly, while the U.S. has experienced dramatic increases in soybean and soybean complex exports in the past five decades, equally dramatic is the persistent decline in U.S.’s share of those exports.

Brazil exported 1.8 percent of world soybean complex exports in 1964, growing to 32.2 percent in 2012. Of the 2012 soybean complex exported by Brazil, soybean meal accounted for 23.7 percent. Before 1995 when China began its rapid increase in soybean imports, that percentage was 68.7 percent as Brazil began competing with the U.S. to capture a portion of the Chinese unprocessed soybean market.

Argentina did not begin to export any of the products in the soybean complex until 1972 when it began to export soybean meal and soybean oil.

World exports of soybean complex in 1964 accounted for 34.7 percent of world soybean production while in 2012, that percentage had nearly doubled to 63.4. Exports are far more important to soybean producers than they are to corn farmers, with corn exports accounting for 10.7 percent of world corn production in 2012.

Much of the recent soybean export boom has been driven by China which, as we noted earlier, ramped up its unprocessed soybean imports in 1995. In the 1998-2001 period, it was China’s imports of soybeans that provided a bright spot on an otherwise dismal agricultural commodity price picture.

China moved into the soybean complex import market in 1994 when it increased its imports of soybean oil by 1.1 million metric tons to 1.7 million metric tons. The following year, China not only began to increase its soybean imports 800,000 metric tons it also boosted its soybean meal imports to 1.2 million metric tons, up from 50,000 metric tons a year earlier. In 2012, China’s imports of soybean meal fell to 20,000 metric tons while soybean oil imports were 1.6 million metric tons.

By 2012, China’s share of world soybean complex trade had increased to 35.7 percent (60.6 million metric tons). In absolute terms China’s soybean complex imports increased by 57.1 million metric tons (54.6 percent of world soybean complex trade). Without China’s 57.1 million metric ton increase in soybean complex imports between 1995-2012 period, the pressure on suppliers such as Argentina, Brazil and the U.S. would have been much lower, as the result of diminished competition for acres between corn and soybeans in that period. As a result, farmers would have seen lower prices for their soybeans and corn. China’s soybean complex imports were clearly responsible for the prosperity soybean farmers have enjoyed in the past two decades.

The U.S. Department of Agriculture estimates that in 2011, China held 15.9 million metric tons of unprocessed soybeans as ending stocks, 114.2 percent of its domestic consumption. With tight world soybean supplies and reduced production in 2012, China used 4.3 million metric tons of its stocks to meet increased domestic consumption, reducing the ending stock percentage to 98.7.

In less than two decades, China has gone from meeting virtually all of its domestic soybean complex needs with domestic production to the point where domestic production equals just 16.9 percent of domestic consumption. While China seeks to maintain self-sufficiency in grains, it clearly has made an exception to its self-sufficiency policy for soybeans.

Editor’s note: Ray is director of the University of Tennessee’s Agricultural Policy Analysis Center. Schaffer is a research assistant professor at APAC.