China and the Global Soybean Market | A CoBank Knowledge Exchange Research Brief

China and the Global Soybean Market | A CoBank Knowledge Exchange Research Brief


A lot has been said over the past
several years about China and how they’ve single-handedly transformed the
world soybean market and there’s no question they certainly have in just 15
years China has gone from being a net soybean exporter to now accounting for
two-thirds of the world’s soybean imports and all those imports have gone
to support China’s soaring demand for animal protein products and dairy
products going forward the big question is what does growth look like for the
future and where will the soybeans come from that China will most definitely
need we’ve looked at several of the factors that are influencing those two
questions and put together some projections for the remainder of the
decade first we see China’s rate of import growth slowing and that’s largely
due to the fact that their overall economy will grow at decelerating rate
the USDA is projecting that China’s soybean imports will grow 23% slower
through 2020 compared with the growth rate over the past decade but don’t
confuse slower growth with less influence China will continue to account
for more than ninety percent of the expansion of the global soybean trade so
China will have more influence not less our second conclusion is that market
share amongst the suppliers of soybeans to China will shift Brazil with its
excess of 200 plus million acres of available unutilized farmland and ideal
climate will establish itself as the primary supplier of soybeans to China
the U.S. on the other hand is land constrained and soybeans must compete
directly with corn for planted area so increases in supply will come only from
improved yields give the comparative advantage to Brazil we expect that they
will maintain their share of the China trade over the next several years while
the U.S. share erodes modestly one caveat here is that for Brazil to take
on and maintain a leading role in soybean trade they will have to make
significant investments in there ag and transportation infrastructure the poor
inroad bottlenecks that we’ve experienced over the last two years
cannot continue if they want to elevate their role as a global soybean provider
overall soybean trade is going to continue to increase and in fact will
expand faster than any other major agricultural commodity and the U.S. will
continue to benefit from that acceleration but Brazil is more
favorably positioned to capture the lion’s share of China’s increasing
demand for soybeans for more details on this analysis check
out the report at CoBank.co under knowledge exchange also keep an eye out
for an upcoming report from renowned Brazil expert dr. Michael Cordonnier, his analysis will further investigate Brazil’s evolving role in the corn and
soybean markets and how that’s influencing U.S. markets here in the U.S