Soybean Oilcake Market in the EU – Key Insights

October 30th, 2019 IndexBox Leave a comment

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

Archives, Global Trade Daily, International Trade

Soybean Prices are a Proxy for How the Trade War is Going

October 29th, 2019 Andrea Durkin Leave a comment

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.

__________________________________________________________________

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.

Archives, Global Trade Daily, International Trade

How Containerization Supercharged Global Trade

August 15th, 2019 Illinois Soybean Association Leave a comment

The Illinois Soybean Association created a series of infographics demonstrating the ways in which containers are used efficiently and create opportunities for many industries. Many aren’t aware of the numerous ways in which shipping containers made transportation easier, thereby supercharging global trade.

The first container shipped from Newark to Houston in April 1956. This set off an era of tremendous efficiency in global shipping of goods and created a standardized unit that could be carried by any truck, train or container ship. Containers today carry anything from bananas to electronics to soybeans. Some ships can carry an astonishing 11,000 containers that are 20ft long.

Currently, container shipping underpins that global economy is moving $4 trillion of goods every year. Read more at https://www.ilsoy.org/.

Archives, Global Trade Daily, Imports/Exports

How Soybeans Can Save Billions in Container Repositioning

August 8th, 2019 Illinois Soybean Association Leave a comment

Containers are essential to the shipping and trade industry, making shipping more efficient and often faster. However, many containers are left to sit idle due to the trade imbalance in the U.S. Costing the industry billions of dollars a year, vacant containers sit empty and cause congestion at ports.

However, container repositioning offers a solution to the wasted money and time many face. By repositioning containers to back-haul with U.S. soybeans, it works to help alleviate a huge problem in global trade.

This introduces profitability when product flows back and forth and offering opportunity to US farmers. In fact, many Asian markets have shown a growing preference for containerized shipping of specific goods, such as soybeans due to the preservation it offers to fresh goods. By working to reposition containers, it offers savings as well as opportunity for U.S. farmers. Read more at https://www.ilsoy.org/.

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BREAKING BAD TRADE: FENTANYL FROM CHINA

August 4th, 2019 Andrea Durkin Leave a comment

The Real Poison Pill in U.S.-China Trade

Following a historic dinner between President Trump and President Xi last December in Argentina on the margins of the G20 Summit, many of us awaited news on tariffs. We were surprised when, as part of a trade announcement, President Trump hailed a commitment from China to step up its regulatory oversight of fentanyl, the opioid that the Centers for Disease Control says has caused a “third wave” of drug-related overdose deaths in the United States.

It seems the seedy underbelly of e-commerce involves a steady stream of online purchases of deadly variants of the drug fentanyl, made in China and shipped to American doorsteps through the U.S. postal service.

Deadly Parcels from China

Fatal drug overdoses have doubled over the last decade, rising from 36,010 in 2007 to 70,237 in 2017. Synthetic opioids other than methadone – mainly fentanyl – now account for 40 percent of all drug overdose deaths and 60 percent of opioid overdose deaths.

China is the primary source of illicit fentanyl, fentanyl analogues, and fentanyl precursor chemicals in the United States. According to U.S. Customs and Border Protection, almost 80 percent of fentanyl seized in 2017 was interdicted at U.S. Postal Service and express consignment carrier facilities, having been shipped in small quantities from China.

Fentanyl precursors are also shipped from China to Mexico, and to a lesser degree Canada, before being synthesized, often mixed with heroin or cocaine, repackaged, and then trafficked over U.S. land borders in the southwest.

STOP

Last March, the White House stepped up its campaign against opioid abuse, seeking to address factors driving both demand and supply. The Initiative to Stop Opioid Abuse (referred to as STOP) includes education programs, measures to curb over-prescription, expanded access to treatment and recovery, and – a focus on cutting off the flow of illicit drugs from China.

According to Homeland Security, more fentanyl in larger volumes is seized at land crossings, but the fentanyl seized from mail and express consignment carrier facilities is far more potent with purities of over 90 percent versus Mexico-sourced fentanyl that is often diluted to less than 10 percent.

The president’s initiative would require the postal service to provide advance electronic data for 90 percent of all international mail shipments within the next two years, offering data that will help law enforcement identify and seize illegal substances shipped through mail. Private shippers such as UPS and FedEx routinely require such electronic data.

The administration is also scaling up the Department of Justice’s “darknet” enforcement efforts. Fentanyl in its various forms is relatively cheap and easy to buy from China online paying with cryptocurrencies, or even credit cards or money transfers.

Over One Million Pills a Day – In One Factory in China

China has grown to become the largest mass producer of generic drugs and pharmaceutical ingredients in the world with over 5,000 pharmaceutical manufacturers. Upwards of 90 percent of the active pharmaceutical ingredients used in U.S. production of finished dosage forms of medical pharmaceuticals is imported from just two countries: India and China.

In addition, China has over 160,000 chemical producers and hundreds of thousands of pharmaceutical and chemicals distributors. The explosion in volume and number of producers has far outstripped China’s FDA (CFDA) from adequately regulating and monitoring them.

Faster Than Can Be Regulated

Unlike opioids derived from the poppy plant, fentanyl is a synthetic painkiller produced in a laboratory. It is 50 times more potent than heroine and 50-100 times more potent than morphine. Inhaling just two milligrams of pure fentanyl can be lethal.

In the United States, most fentanyl products are classified either as Schedule I chemicals, those that have no accepted medical use and high potential for abuse, or as Schedule II chemicals, those with medical use but only available through a non-refillable prescription.

Fentanyl’s molecular structure can be easily modified to create new derivatives, putting regulators constantly behind in evaluating and classifying each new variant one-by-one. From furanyl fentanyl, acetyl fentanyl, acryl fentanyl, to carfentanil — to name just a few — fentanyl has hundreds of analogues that differ slightly from the original, enabling criminal producers to operate in a gray territory while regulators struggle to ban the new substances. Legislation passed in 2017 now allows U.S. FDA to schedule fentanyl analogues immediately on a temporary basis while the agency conducts its investigations.

President Trump has urged President Xi to implement a similar approach. China currently controls around 25 types of fentanyl-related products. President Trump wants China to establish fentanyl as its own class of controlled substances, restricting all fentanyl analogues, including future fentanyl-like substances. Doing so would be a start.

Busting Drug Trade

Such a commitment by China is not, however, likely to put a dent in its fentanyl exports to the United States absent real enforcement. In recent years, CFDA has imposed stricter licensing requirements for pharmaceutical and chemical producers, but diversion, adulteration, and clandestine production remain significant problems.

“Chinese chemical manufacturers export a range of fentanyl products to the United States, including raw fentanyl, fentanyl precursors, fentanyl analogues, fentanyl-laced counterfeit prescription drugs like oxycodone, and pill presses and other machinery necessary for fentanyl production.” — U.S China Economic and Security Review Commission Staff Research Report

CFDA has undergone several reorganizations in the last few years. In the most recent, some of its regulatory responsibilities have devolved to provinces and counties with little accountability. Pre-marketing approvals will be managed separately from post-market inspections and surveillance. With just a little over 2,000 inspectors, authorities have little hope of effectively overseeing legal compliance, let alone spotting even a fraction of criminal activity.

The central government has assisted U.S. drug and law enforcement agencies, sharing information and intelligence that helps U.S. agencies target Chinese nationals trafficking illicit drugs in the United States. To alleviate the free flow of fentanyl from China, the Chinese government should also prosecute transnational criminals operating in China in high-profile cases with severe penalties.

Soybeans, Tech Transfer, and Fentanyl

Trade talks over soybeans and intellectual property protections for American technologies seem an unlikely setting for addressing illicit trade in deadly fentanyl.

There are some in the United States who are frustrated with this administration’s willingness to toss out the traditional trade policy playbook, but this is one case where it can welcomed by everyone.

Interested to read about fentanyl trade in more detail?

See two key reports produced by U.S.-China Economic and Security Review Commission analyst Sean O’Connor: Fentanyl: China’s Deadly Export to the United States, February 2017 and Fentanyl Flows from China: An Update, November 2018

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

Archives, Global Trade Daily, Imports/Exports

Soybean Transport Efficiencies: Containers Win the Export Race

June 18th, 2019 Illinois Soybean Association Leave a comment

Illinois, the global leader of producing and exporting soybeans, is uniquely positioned to efficiently export soybeans through container shipping or bulk barge to international markets around the world. With about two-thirds of Illinois soybeans destined for export, it’s crucial to ensure an efficient transportation process. Containers and bulk shipments of soybeans from Illinois can travel through the Gulf of Mexico, the Pacific Northwest, California and even the St. Lawrence Seaway to reach Asian markets.

Not only is container shipping faster, but it also results in higher quality soybeans by preservation in container. Standard freight containers are loaded and sealed, then transferred onto ships, trains and trucks with the goods secured throughout the transportation process. Shipping via container is on average 42 days in comparison to 51 days via bulk vessel shipping. For more information, visit: http://bit.ly/2WM8OuP

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Containerized Shipping of U.S. Soybeans Spikes in Asian Countries

April 19th, 2019 Haylle Sok Leave a comment

A recent report from the Illinois Soybean Association and the Federal Grain Inspection Service reveal containers shipping soybeans to Asian regions has spiked by 40 percent since 2014-2015.

Primarily led by Indonesian purchases, containerized shipping is experiencing an overall increase in demand for shipping U.S. soybeans to the specified region and shows no signs of slowing down. Additional information noted that container shipments of soybeans are expected to increase by 18 percent through August 31.

“Wider use of containers, thanks to the huge supply of empties in the Chicago area, has resulted in industry investments to increase the visibility and viability of this option,” said Eric Woodie, a trade analyst with the ISA checkoff program.

“There’s a major opportunity to take advantage of empty containers sitting idly in the U.S. and return them to export markets with soybeans. Not only does this help alleviate a significant problem in global trade, but it offers great value to international buyers, soybean exporters and Illinois farmers.”

Countries listed with the highest containerized soybean shipping include Indonesia, Thailand, Vietnam, and Malaysia. Indonesia is reported as the top buyer with a total of 1.4 million tons of soybean shipments. This method of shipping provides smaller companies the ability to minimize inventory investments while preventing lengthy delivery times, ultimately supporting added preservation.

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As sales of U.S. soybeans to China plunge amid trade dispute, exporters need a new strategy to access international markets

November 9th, 2018 Eric Woodie Leave a comment

Trade tensions between the United States and China are being felt across America’s heartland.

Prices for soybeans have tumbled and stockpiles are growing with the harvest nearly complete because exports to China, the largest foreign destination for U.S. soybeans, have plummeted. The latest federal data, through Oct. 25, shows American soybean sales to China have declined by 97 percent from last year’s harvest.

In response to U.S. tariffs placed on billions of dollars of Chinese goods, China imposed a 25 percent tariff on U.S. soybeans and shifted to buying soybeans from Brazil and other countries. Since tariffs were announced in June, the going rate of U.S. soybeans has fallen from roughly $10.50 a bushel to $8.34, as of Oct. 30, according to Markets Insider.

The timing of the trade dispute couldn’t be worse for American farmers. The USDA has forecasted that U.S. soybean production in 2018 harvest would rise to an all-time high of 4.6 billion bushels, up from 4.4 billion bushels a year earlier. The federal estimate for Illinois, the top-producing state, shows an increase of 12.4 percent to 688 million bushels.

While farmers hope for a new trade deal, there is urgency to find alternative markets for the oilseed. One of the keys to diversifying the U.S. export market lies in a 20-foot-long steel box.

Shipping containers dominate international trade. Yet, they are not widely used in U.S. agricultural exports. The movement of soybeans in 20-foot or 40-foot-long containers has represented 5 to 7 percent of total U.S. soybean exports in recent years. Bulk ocean vessels and rail to markets in Canada and Mexico are the current primary transportation methods.

But to enter new markets, smaller shipments will be needed, and container shipping is the solution. It offers several advantages over bulk vessels, including:

-Soybeans shipped in containers are generally higher in quality because they are handled less, reducing the amount of split and broken soybeans and foreign materials.

-Smaller importers can buy the measured quantities they demand, ordering soybeans only when they need them, as opposed to taking positions for large deliveries on bulk shipping vessels. “Just-in-time” inventory management, popularized by the Japanese and now prevalent throughout manufacturing, cuts costs and reduces waste.

-In the event there are logistical problems, the demurrage for containers is much lower than that of entire vessels, thereby minimizing the overall financial risk.

-Buyers seeking high-value or specialty soybean products can buy direct from smaller exporters. Importers in Japan use containers, for instance, to preserve food-grade soybeans.

-Customers can have their orders fulfilled much quicker. Three to four weeks is the typical turnaround time for the container shipping to Asia, compared with three to four months via the bulk vessel channel.

U.S. soybean exporters have been able to nurture markets in Taiwan and Indonesia by shipping in containers. Indonesia is now one of the largest importers of soybeans. In addition to producing animal feed, Indonesia uses soybeans to make foods such as tofu and tempeh.

Thailand, Vietnam and other countries in Southeast Asia are also using more soybeans as household incomes grow. Income growth leads more meat consumption, which in turn fuels demand for soybean-based animal feed.

Smaller international markets in Asia, Europe and Africa are perfect for container shipping because they haven’t achieved the economies of scale required to use the bulk transportation system.

Shipping by container also will help solve a major problem in the logistics industry. More than 11 million maritime containers arrive at U.S. ports each year. Most of those are coming from Asia, containing televisions, furniture, sneakers and other manufactured goods. But the imbalance of trade between Asia and the U.S. means about half of those are returning empty.

All this empty space on ships is a multi-billion-dollar loss for shipping companies, exporters and importers. Soybeans and other grains can take advantage of backhauling opportunities for ocean carriers repositioning empty containers.

Momentum to ship soybeans by container is growing. Soybeans loaded into containers in Illinois reached a new high of 66 million bushels in the 2017-18 marketing year ended Aug. 30, according to Informa Economics IEG.

But that represents about 10 percent of soybean production in Illinois, so there is a lot of room for growth. Illinois is the nation’s top producer of soybeans, is close to a sizeable supply of available containers and has several major railroads converging in the Chicago area.

The American economy depends on the exporting of soybeans and other crops. Even if China lifts the tariffs on soybeans, the trade standoff has sharply illustrated the need to cultivate new markets. Shipping by container can help lead the way.

Eric Woodie is a trade analyst with the Illinois Soybean Association’s Checkoff Program, and has over a decade of experience in export trade, foreign markets, and inland logistics.

Archives, Global Logistics, Global Trade Daily, News, Ocean Carriers, Ocean Ports

Port of Vancouver USA Welcomes New Bulk Carrier

October 31st, 2014 Haylle Sok Leave a comment

Vancouver, WA – The Port of Vancouver USA recently welcomed the bulk carrier Kypros Unity on her maiden voyage.

The Kypros Unity is a Panamanian-flagged bulk carrier launched earlier this year in Japan. The ship is owned by Gloverthree Shipping Corp., chartered by Mitsui & Co. Ltd. and operated by Safety Management Overseas S.A.

The vessel is 738 feet long and has a deadweight capacity of 78,056 metric tons.

The Kypros Unity called at Busan, South Korea, to take on fuel before calling at Vancouver, where she loaded more than 64,000 metric tons of soybeans for China.

Agricultural products, including soybeans, wheat and corn, are the Port of Vancouver’s top exports by weight. The port has exported 278,014 metric tons of soybeans so far this year, mainly to Asia.

10/31/2014