Connecting the dots between soybeans and energy

The recession and the correction in ag prices that came with it have raised new questions for soybean and other oilseed farmers

The Global Opportunities program update of the soybean meal market explains the linkages that have developed with energy markets. These relationships have altered price forecasting in the vegetable oil arena especially.

A lot can change in four years, so the soybean checkoff funded a study The Soybean Meal Evaluation, examining the current state of supply and demand issues for U.S. soybean meal.

The USB Global Opportunities program update of the soybean meal market explains the linkages that have developed with energy markets. These relationships have altered price forecasting in the vegetable oil arena especially. Researchers conducting the study consider how aggregate oil and meal demand have been influenced by lower incomes, and the shifting preferences for certain oils in the increasingly health-conscious U.S. market.

“The original study in 2006 focused on the competition between soybeans and corn for land, overseas growth in soybean acreage, poultry and livestock production and support for renewable fuels,” says Vanessa Kummer, USB vice chairperson and soybean farmer from Colfax, N.D. “In the latest study, focus was on how global factors, such as the recession and the link between petroleum products and soy oil, have influenced the price.”

Since the price of some agricultural commodities spiked in 2008, the world has suffered a severe and deep recession prompted by the onset of the financial crisis in late 2008 and 2009. The recession, and the sharp correction in agricultural prices that accompanied it, has raised a new set of questions for soybean and other oilseed farmers.

“We are in a global economy,” says Kummer. “What affects one part of the world affects all. With the recession, lower incomes have influenced the lessening demand for soybean oil and soybean meal, as both meal and oil consumption are responsive to income changes and consumers eat less meat. Poultry and livestock consumption is the major use of soybean meal.”

USB supplemented the report with updates in 2007, 2008 and 2010. To see view the entire 2010 Soybean Meal Update, click here.