Soybean Demand and Supply Worldwide
Soybeans or Soya beans are a highly demanded agricultural commodity because of their substantial protein content. Currently trading at approximately US$950 per bushel (USD/BU), soybeans are also used in the production of consumer goods, such as oil and milk. This article looks at the soybean market worldwide, including its main consumers and producers.
Soybean Demand and Supply Worldwide
Soybeans are considered an oilseed because one of the main uses of the crop is the production of cooking oil, which is utilized around the world. However, soybeans are also widely used as animal feed and included in some food items, such as tofu. The United States and Brazil dominate the global soybean market, each country representing approximately 30% of the total production. Therefore, both countries export substantial amounts of soybeans and soybean products to markets like China every year. In the case of Brazil, soybean production for the 2016/17 season is projected to be of 101 million metric tons. In Brazil, soybean cultivation takes place, mainly, in the state of Mato Grosso, which currently serves as the frontier between the Amazon rainforest and the country’s agricultural fields. In the case of the US, the most productive region for soybean cultivation is the Midwest, where soybean fields are planted alongside cornfields.
In both Brazil and the United States, agricultural commodity producers tend to slightly vary some of the yearly production based on market outlooks. For example, in Brazil, farmers increased corn planting for the 2016/17 harvest season at the expense of soybean planting given the higher corn prices and the lower soybean prices. Meanwhile, for Indian farmers, weather can be true hardship given that the Monsoon rains are unpredictable. Either because the rains are too scarce or because they are too abundant, the harvest of agricultural commodities, such as soybeans, can vary substantially on a year-by-year basis.
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China, who is the world’s largest importer of soybeans, purchases more than 50% of all internationally traded soybean commodities. Though minor producers, India and China cultivate soybeans to complement foreign imports and satisfy their domestic demand. Likewise, both China and India are highly dependent on natural irrigation (i.e. rainfall) for soybean production. China’s most productive soybean cultivation regions are located in the northeast; whereas India’s most productive province is located in the heart of the country. During the 2016/17 harvest season, China is expected to yield 12.5 million metric tons of soybeans, which represents an increase when compared to previous years. This increase in production can be partially attributed to government policies promoting cultivation of this agricultural commodity and granting financial incentives to soybean farmers.
Similarly, India’s expected yield for the 2016/17 season is of 9.7 million, which represents a slight production increase when compared to previous years. However, excessive rainfall in some of India’s most productive regions have delayed or spoiled the plantation of soybean crops for the upcoming season. Chinese and Indian soybean demand is mainly destined to cooking oil, meal consumption, and animal feed. In fact, large amounts of the population in both of these countries rely on soybean as an essential part of their diet.