soybean trade Archives

IndexBox has just published a new report: ‘EU – Soybean Oilcake – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

The revenue of the soybean oilcake market in the European Union amounted to $10.4B in 2018, going up by 1.8% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). In general, soybean oilcake consumption, however, continues to indicate a relatively flat trend pattern. The pace of growth was the most pronounced in 2008 when the market value increased by 10% against the previous year. In that year, the soybean oilcake market attained its peak level of $12B. From 2009 to 2018, the growth of the soybean oilcake market remained at a lower figure.

Consumption By Country in the EU

The countries with the highest volumes of soybean oilcake consumption in 2018 were France (3.2M tonnes), Italy (2.8M tonnes) and Poland (2.5M tonnes), together comprising 34% of total consumption. The UK, Germany, Spain, Denmark, the Netherlands, Belgium, Austria, the Czech Republic and Sweden lagged somewhat behind, together comprising a further 51%.

From 2007 to 2018, the most notable rate of growth in terms of soybean oilcake consumption, amongst the main consuming countries, was attained by Austria, while the other leaders experienced more modest paces of growth.

In value terms, France ($1.4B), Italy ($1.2B) and Denmark ($1.2B) were the countries with the highest levels of market value in 2018, together comprising 36% of the total market. The UK, Poland, Spain, the Netherlands, Austria, Belgium, Sweden, the Czech Republic and Germany lagged somewhat behind, together accounting for a further 48%.

In 2018, the highest levels of soybean oilcake per capita consumption was registered in Denmark (280 kg per person), followed by Austria (94 kg per person), the Netherlands (81 kg per person) and Belgium (75 kg per person), while the world average per capita consumption of soybean oilcake was estimated at 49 kg per person.

In Denmark, soybean oilcake per capita consumption plunged by an average annual rate of -1.6% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Austria (+5.5% per year) and the Netherlands (+5.5% per year).

Production in the EU

In 2018, approx. 8.1M tonnes of soybean oilcake were produced in the European Union; jumping by 18% against the previous year. In general, soybean oilcake production, however, continues to indicate a slight reduction. The growth pace was the most rapid in 2018 when production volume increased by 18% against the previous year. Over the period under review, soybean oilcake production reached its maximum volume at 9.2M tonnes in 2007; however, from 2008 to 2018, production stood at a somewhat lower figure.

In value terms, soybean oilcake production totaled $3B in 2018 estimated in export prices. The total output value increased at an average annual rate of +1.5% over the period from 2007 to 2018; however, the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed over the period under review. The growth pace was the most rapid in 2009 with an increase of 26% against the previous year. Over the period under review, soybean oilcake production attained its maximum level at $3.1B in 2013; however, from 2014 to 2018, production remained at a lower figure.

Production By Country in the EU

The countries with the highest volumes of soybean oilcake production in 2018 were the Netherlands (1.9M tonnes), Germany (1.7M tonnes) and Italy (791K tonnes), with a combined 53% share of total production. France, Austria, Portugal, the UK and Sweden lagged somewhat behind, together comprising a further 31%.

From 2007 to 2018, the most notable rate of growth in terms of soybean oilcake production, amongst the main producing countries, was attained by Austria, while the other leaders experienced more modest paces of growth.

Exports in the EU

In 2018, the amount of soybean oilcake exported in the European Union stood at 6.7M tonnes, jumping by 3% against the previous year. Overall, soybean oilcake exports, however, continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2015 when exports increased by 11% y-o-y. In that year, soybean oilcake exports reached their peak of 8.1M tonnes. From 2016 to 2018, the growth of soybean oilcake exports remained at a lower figure.

In value terms, soybean oilcake exports amounted to $2.8B (IndexBox estimates) in 2018. The total exports indicated a temperate increase from 2007 to 2018: its value decreased at an average annual rate of -0.2% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2008 when exports increased by 53% y-o-y. Over the period under review, soybean oilcake exports reached their peak figure at $4.3B in 2013; however, from 2014 to 2018, exports remained at a lower figure.

Exports by Country

The Netherlands was the key exporting country with an export of about 3.1M tonnes, which accounted for 46% of total exports. Germany (1,644K tonnes) occupied a 24% share (based on tonnes) of total exports, which put it in second place, followed by Belgium (7.1%) and Slovenia (4.5%). The following exporters – Spain (247K tonnes), Romania (156K tonnes) and the UK (113K tonnes) – together made up 7.7% of total exports.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Romania, while the other leaders experienced more modest paces of growth.

In value terms, the Netherlands ($1.3B) remains the largest soybean oilcake supplier in the European Union, comprising 47% of total soybean oilcake exports. The second position in the ranking was occupied by Germany ($645M), with a 23% share of total exports. It was followed by Belgium, with a 7.1% share.

In the Netherlands, soybean oilcake exports increased at an average annual rate of +3.7% over the period from 2007-2018. The remaining exporting countries recorded the following average annual rates of exports growth: Germany (+4.7% per year) and Belgium (-3.2% per year).

Export Prices by Country

In 2018, the soybean oilcake export price in the European Union amounted to $419 per tonne, jumping by 7.6% against the previous year. The export price indicated perceptible growth from 2007 to 2018: its price increased at an average annual rate of +3.0% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2008 an increase of 42% year-to-year. The level of export price peaked at $579 per tonne in 2013; however, from 2014 to 2018, export prices stood at a somewhat lower figure.

Average prices varied noticeably amongst the major exporting countries. In 2018, major exporting countries recorded the following prices: in Romania ($434 per tonne) and the Netherlands ($428 per tonne), while Spain ($379 per tonne) and the UK ($384 per tonne) were amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by the Netherlands, while the other leaders experienced more modest paces of growth.

Imports in the EU

In 2018, the amount of soybean oilcake imported in the European Union amounted to 24M tonnes, coming down by -1.7% against the previous year. Overall, soybean oilcake imports continue to indicate a slight slump. The pace of growth was the most pronounced in 2014 with an increase of 6.7% year-to-year. The volume of imports peaked at 31M tonnes in 2008; however, from 2009 to 2018, imports remained at a lower figure.

In value terms, soybean oilcake imports stood at $9.8B (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +1.2% over the period from 2007 to 2018; the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The pace of growth appeared the most rapid in 2008 with an increase of 42% against the previous year. The level of imports peaked at $13.3B in 2014; however, from 2015 to 2018, imports failed to regain their momentum.

Imports by Country

The imports of the nine major importers of soybean oilcake, namely the Netherlands, France, Poland, Spain, Germany, Italy, the UK, Denmark and Belgium, represented more than two-thirds of total import. Ireland (585K tonnes) followed a long way behind the leaders.

From 2007 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Ireland, while the other leaders experienced mixed trends in the imports figures.

In value terms, the largest soybean oilcake importing markets in the European Union were France ($1.2B), the Netherlands ($1.1B) and Poland ($1B), together comprising 34% of total imports. These countries were followed by Germany, Spain, the UK, Italy, Denmark, Belgium and Ireland, which together accounted for a further 51%.

In terms of the main importing countries, Ireland recorded the highest rates of growth with regard to imports, over the last eleven-year period, while the other leaders experienced more modest paces of growth.

Import Prices by Country

The soybean oilcake import price in the European Union stood at $414 per tonne in 2018, growing by 9.7% against the previous year. The import price indicated tangible growth from 2007 to 2018: its price increased at an average annual rate of +3.2% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. The most prominent rate of growth was recorded in 2008 when the import price increased by 36% year-to-year. The level of import price peaked at $555 per tonne in 2013; however, from 2014 to 2018, import prices remained at a lower figure.

Average prices varied noticeably amongst the major importing countries. In 2018, major importing countries recorded the following prices: in France ($441 per tonne) and Germany ($432 per tonne), while Belgium ($372 per tonne) and Spain ($384 per tonne) were amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Germany, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

Soybeans are in your cereal, candles, crayons and car seats

Soybeans have more far uses than most of us realize. After harvesting, soybeans are dehulled and rolled into flakes as its oil is extracted. Soybean oil has become an ingredient ubiquitous in dressings, cooking oils and many foods, but is also sold for biodiesel production and other industrial uses.

Soy flours feature prominently in commercial baking. Soy hulls are part of fiber bran cereals, breads and snacks. Soybeans are even part of building materials, replacing wood in furniture, flooring and countertops. They are in carpets, auto upholstery and paints. Soybean candles are popular because they burn longer with less smoke. Soy crayons are non-toxic for children. And – because soybeans are high in protein – they are a major ingredient in livestock feed, which provides much of the impetus for globally traded soybeans.

Bean counting

Given this panoply of applications, it should be no surprise that global demand for soybeans is growing, but it’s mostly animal mouths we are feeding. Demand for soybean meal for livestock feed drives two-thirds of the export value of traded soybeans.

According to the Agricultural Market Information System, three countries produce 80 percent of the world’s soybeans to fill this demand: the United States, Brazil and Argentina.

At 123.7 million metric tons produced in 2018, U.S. farmers accounted for 34 percent of world production. Brazil’s farmers yielded 117 million metric tons, accounting for 32 percent of world production, but Brazil exported larger volumes than the United States.

Rounding out the top three, Argentina accounts for 15 percent of world production but exported just 6.3 million metric tons in 2018. China is fourth, producing 15.9 million metric tons in 2018 – just four percent of world production.

America’s second largest crop

Grown on more than 303,000 farms across the United States, soybeans are the second largest cash crop for American farmers. Conventional soybeans are grown in 45 U.S. states while high oleic soybeans are grown in 10 states. Though output varies each year, at 4.54 billion bushels in 2018, U.S. growers are so productive they can now yield twice as many bushels of soybeans as two decades ago. (At SoyConnection.com, you can click on this map to see the number of farms, acres, and bushels produced in each state.)

China’s insatiable appetite

China cannot get enough soybeans. When China entered the WTO in 2001, the country was already consuming 15 percent of the world’s soybeans, driving 19 percent of global trade in soybeans. By 2018, China’s appetite had grown 815 percent according to the U.S. Farm Bureau, which says China’s demand now supports 62 percent of world trade in soybeans.

According to the Farm Bureau’s calculations, China consumes one-third of every acre harvested in the world – an amount equivalent to or more than total U.S. soybean acreage. Around 60 percent of U.S. yields were sold to China in 2017, which means there was a lot at risk for U.S. farmers caught in the crosshairs of the trade war that unfolded in 2018.

A pawn in the trade war

In July 2018, the United States fired the first tariff shot in its efforts to seek redress for the intellectual property theft cited in its Section 301 investigation into China’s practices, by imposing tariffs on $34 billion worth of China’s imports. China responded with 25 percent tariffs on an equivalent amount, including on soybeans from the United States. The tariff has remained in place as leverage in the trade war – a proxy for whether China perceives progress is being made or not in the negotiations.

In intermittent gestures of goodwill, China agrees to make purchases but has often not fulfilled orders for the promised amounts. When President Trump angrily tweeted on August 23 this year that China was not negotiating in good faith and that U.S. tariffs would cover more imports from China, China responded in part by adding five percent to its tariffs on soybeans.

A factor in price fluctuations

The Food and Agricultural Policy Research Institute at the University of Missouri recently offered a gloomy forecast for lower prices for soybeans: $8.43 per bushel for 2019-20, dropping further to $7.94 per bushel for the 2020-21 marketing years. They say lower prices are resulting from a combination of adverse weather, African swine fever disease that is decimating herd inventories throughout Asia and therefore weakening demand for feed – and the ongoing trade dispute.

On May 13 this year, coincident with some fiery presidential tweets expressing frustration with China, soybean prices reached a 10-year low. USDA estimates that, at 4.54 billion bushels produced last year, a drop in average price per bushel from $9.33 in 2017 to $8.60 in 2018 translates to losses for U.S. soybean farmers of $3.3 billion.

Bait and switching

Adding to the strain of lower prices, China has drastically pared back its soybean orders from the United States. In 2016, the United States shipped 36.1 million metric tons of soybeans to China. In 2018, sales dropped to just 8.2 million metric tons.

The Chinese government is able to avoid its own tariffs by directly purchasing U.S. soybeans which it then sells to private users in China. The government has also granted tariff exemptions to Chinese soybean crushers. Just this week, the government granted an exemption to state-owned, private and international companies to import 10 million metric tons of U.S. soybeans tariff-free. Overall, the quantities purchased through these mechanisms is not nearly enough to make up for the vast shortfall in supply from the United States.

So, China is buying more from Paraguay, Uruguay, Argentina, Canada and in particular from Brazil, which has moved in to supply 75 percent of China’s total imports. For U.S. soybean exporters, lower prices per bushel have attracted new buyers from Europe, Mexico and elsewhere, but those sales are not enough to replace lost sales in China.

Homegrown

China is hedging its bets by rejiggering the incentives it provides to its own farmers. Upon releasing a new white paper, the head of the National Food and Strategic Reserves Administration said that even though China’s food production and reserves are strong, “We must hold the rice bowl firmly in our hands, and fill it with even more Chinese food.”

In addition to directly investing in agricultural infrastructure in Brazil, neighboring Russia, and other suppliers, the Chinese government has set a goal to increase domestic soybean production in five years from 16 million to 24 million metric tons, according to the U.S. Soybean Export Council.

News China reported in January that Chinese farmers in Heilongjiang, China’s main grain producing province, are being provided incentives to switch from wheat and corn to planting more soybeans. For years, the Chinese government has offered price supports for corn. Under new policies, crop rotation can earn Chinese farmers $322 per hectare in subsidies in addition to subsidies of between $373 and $430 per hectare offered by provincial authorities.

The Ministry of Science and Technology is also supporting trials of hybrid soybean seeds that are more weather-resistant and could more than triple the average yield for soybeans grown in China.

Long term disruptions

It’s possible the United States and China will ink a partial deal in the coming weeks that provides relief for American soybean farmers.

The American Soybean Association says it is “hopeful this ‘Phase 1’ agreement will signal a de-escalation in the ongoing U.S.-China trade war… rescinding the tariffs and helping restore certainty and stability to the soy industry.”

China has reportedly promised to purchase $40 billion to $50 billion in U.S. agricultural goods, which would be scaled up annually. That would be double the $24 billion China spent on American farm goods in 2017.

When seeds are in the ground, the acreage is committed, but as American farmers wait and watch the trade war, they are surely thinking about how to plant around these disruptions in outer growing years.

Over the last year, some reliable overseas customers are buying up stocks of U.S. soybeans that would otherwise have gone to China and some new customer relationships are being forged in emerging markets such as Egypt, Bangladesh, Pakistan and Southeast Asia.

When the tariffs are permanently removed, it will remain to be seen whether trading patterns will also have permanently shifted.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

Soybean Oilcake Market in the EU – Key Insights