Despite drought, Argentina and Brazil are expected to have harvests that contribute significantly to the world market.
Because of these events in South America, markets are telling farmers they should plant soybeans this year, according to Mac Marshall, USB vice president of market intelligence. “Farmers are going to be managing both agronomic and economic needs. Increased demand for soybean oil in the wake of challenges from palm, canola and sunflower oil production is creating an opportunity for soybean oil to fill the oil demand. There’s also been an aggressive effort to utilize soy oil as a feedstock to run facilities producing renewable fuels. The market is constantly adjusting prices to accommodate for these changes.”
In addition to growing conditions in South America, Chinese decisions on importing grain are an important consideration. China has traditionally been our largest U.S. soybean export customer.
“In the fall of 2020, the U.S. had pulled through the trade war, and China was making large purchases. With current global challenges, the war in Ukraine and drought conditions in countries that traditionally bring a lot of soybeans to the world market, China will need to continue importing soybeans for animal feed,” said Marshall.
It is noteworthy that this year, U.S. Soy commemorated its 40-year partnership with the Chinese agriculture industry. That relationship, nurtured through the years, continues to ensure that U.S. soybeans are in demand as a reliable, high-quality product.
While China looks to remain a strong export destination for U.S. Soy, USB and USSEC have worked to diversify exports to markets around the world.
“Most people don’t realize that Egypt is the United States’ fourth-largest export destination for U.S. soybeans. Ecuador is a large importer of soybean meal. With Brazil being China’s largest soybean supplier now, we have done a good job of seeking other markets to sell our grain and meal,” said Marshall. “With the increase in demand for soybean oil, we have a large amount of high protein meal to export. Right now, we export about 12 million metric tons of meal.”
With issues ranging from the war in Ukraine to weather conditions around the world, there are a lot of variables to consider. Marshall advises: “Understand what is unfolding beyond our fences and beyond our domestic borders. Have those critical conservations on what is impacting our prices and ask the right questions. Talk about what is unfolding in China and South America and what is happening domestically to not pit commodity versus commodity or country against country.”
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