Soybean trading patterns likely to continue for now

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When it comes to soybeans, only three countries really matter — Brazil, the United States and China.

The U.S. and Brazil supply about 80 percent of the world’s soybean exports and China accounts for about 60 percent of the globe’s imports.

A number of countries, including China, have ambitions of changing the trading pattern and disrupting the Brazil/U.S. duopoly in soybean exports.

But that won’t happen in the next decade, said a U.S. Department of Agriculture report.

“The interdependence of China, Brazil, and the United States in soybean trade is likely to persist. China’s demand for soybeans is expected to continue growing, and there are no major alternative suppliers in the near term,” wrote Fred Gale, senior economist with the USDA Economic Research Service, in a June report on the world’s soybean trade.

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Gale, who studies China’s trade of agricultural goods, said Chinese dominance of soybean imports is unusual in global agriculture.

Normally, five or 10 countries import the majority of a specific commodity, like wheat or corn.

But in 2016-17 China represented 65 percent of all the soybean imports in the world.

China imports such large amounts of soybeans to produce meal for livestock and edible oil for human consumption. Chinese leaders would like to reduce their dependence on the U.S. for soybeans, perhaps by importing more beans from the Black Sea region.

“We can expect an increase in (soybean) exports from Russia to China, but it will not skyrocket,” Laurent Crastre, an oilseed analyst with French agriculture consultancy Strategie Grains, told Bloomberg last year.

Soybean exports from the Ukraine and Russia to China may rise over the next decade, but those countries will remain minor players, Gale wrote in his report.

“USDA projections anticipate little potential for increased soybean exports from new suppliers. Creating new soybean exporters is a slow and costly process that would take years, even decades, to succeed.”

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Other countries will struggle to crack the Brazil-U.S. dominance of soybean production and exports, but one thing will likely change over the next decade.

Brazil will become the major exporter of soybeans, pulling well ahead of the United States, Gale said.

By 2028, the USDA predicts that Brazil will export 96.1 million tonnes of soybeans — up from 63 million tonnes in 2016-17.

Meanwhile, U.S. exports will be flat, going from 59 million tonnes in 2016-17 to 61.4 million in 2028.

“USDA projects continued increase in Brazil’s soybean area to 44.8 million hectares (110.7 million acres) in 2028 (compared to 35 million hectares (86.5 million acres) in 2017), while corn area rises to 21.5 million hectares (53.1 million acres),” Gale wrote. “This potential for expansion ensures abundant supplies and likely means that Brazil will remain the primary supplier of China’s soybean imports.”

On the import side, China will continue to dominate soybean imports for the next decade.

The USDA expects global imports of soybeans will hit 196 million tonnes in 2028 and China will import 126 million (64 percent).

Gale and his colleagues focused mostly on Brazil, the U.S. and China in the report, but they also included good news Canada’s soybean industry.

Gale and colleagues expected Canadian soybean exports to hit 7.6 million tonnes in 2028, up from 4.6 million tonnes in 2016-17.