Market Spotlight: Silver Linings

Amidst Trade Issues, Economists Highlight Opportunities in Domestic and New Foreign Markets

Updates on trade issues with China fill the headlines. But, what do they really mean for U.S. soy exports over the long term?

Economists Keith Menzie, currently serving as oilseeds analyst for U.S. Department of Agriculture, and John Baize, economic consultant for U.S. Soybean Export Council, agree it’s not as bleak for U.S. soybean farmers as it may seem from a glance at the newspaper.

“It can be easy to get caught up in the negatives, but there are a lot of other positives to consider. There are silver linings,” Menzie says.

With the lowest season average price on beans in 12 years forecasted and a bin-busting supply, it’s widely known that this season has brought hardship to soybean farmers all over the country. Despite these concerns, opportunities still lie in the domestic market and new international trade opportunities.


“Domestic use is the first place we go with our soybeans, and that continues to look bright,” says Menzie.

The U.S. crush profit margins have been steady and attractive recently. USDA estimates this market at 2.1 billion bushels on a trailing 12-month model, representing almost half of U.S. soybeans in 2018.

“Which would be a record by a long shot,” according to Menzie.

Soybean meal for livestock feed continues to be a reliable avenue for U.S. soy. Data shared at the Express Markets Inc. Fall Protein Conference confirmed that, despite projected low profitability in the poultry and swine segments, the industries are expected to maintain growth at three to four percent in the next two years.

“Global incomes, meat consumption and the demand for feeding livestock are all on the rise,” Menzie says.

Aquaculture is another market to watch.

“Aquaculture is a big opportunity,” says Baize. Thanks to increasing animal protein demand from a growing middle class, “we’re going to see a lot of growth in demand for soybean meal feed in Southeast Asia and Latin America.”

Beyond animal feed, checkoff partnerships continue to uncover new uses for U.S. soybeans. United Soybean Board CEO Polly Ruhland says the current market conditions have only reaffirmed the soy checkoff’s commitment to discovering and developing these markets.

“Soy is such a unique product because we can use it in so many ways,” she says. “Crisis sometimes brings good change, and that’s what we’re trying to do in the checkoff: make this crisis bring good change further down the road for soy farmers.”

Favorable partnerships with manufacturers for industrial uses such as lubricants, adhesives and others indicate further opportunity in this segment.

“You can either look at it from the point of view that a quarter of our soybeans were going to China, or you can look at it that three-quarters of our soybeans were not going to China,” Menzie says. “Let’s look in that direction.”


Trade issues with China significantly reduced that country’s U.S. soy imports, which shifted international supply chains. Although U.S. soybean farmers lost their largest export market, several other countries appear ready and willing to pick up the slack.

“There are only so many soybeans in the world,” says Baize. “Thanks to checkoff dollars funding marketing and education programs across the globe, importers in new markets who may not have considered U.S. soybeans might now consider U.S. beans due to China purchasing much more from South America.”

Countries in South Asia, North Africa and the Middle East such as Vietnam and Egypt, as well as some in Europe, have already made commitments to purchase more U.S. soy.

“We’re up substantially in exports (in these new regions) because those countries typically import from Brazil. But, with those beans going to China, they’re more than willing to work with us,” says Baize.

As a result, overall exports are on track, if slightly lower, comparable to previous years. U.S. exports dropped from 47.9 million tons to 42.7 million tons during the first seven months of the 2017-2018 marketing year, according to the latest data from the U.S. Census Bureau. However, during June, July and August 2018, the U.S. exported 10 million tons of soy compared to only seven million during the same time frame last year.

“Global demand is projected to grow by about 15 million tons in marketing year 18-19,” says Baize. “That means there will be room out there to export more, even if it’s not going to China.”

Although no one wants to lose access to the Chinese market, the U.S. has a diverse export market for its soy with varied demand surges, harvest seasons and changing industries.

“If we can get rid of what we need to export this year and do it with other countries, we’ll be a lot less vulnerable to having our exports disrupted by one country again,” Baize adds.

While this year’s losses are marked with doomsday headlines, a new and more diverse export market may be the silver lining soybean farmers need to hunker down and carry on.

U.S. SOY EXPORTS 2014-2015








SOYBEANS 50,135,798 52,869,979 58,960,230 57,944,642
SOYBEAN MEAL 11,775,022 10,761,513 10,426,301 13,311,175
SOYBEAN OIL 913,704 1,017,200 1,159,229 1,109,990
TOTAL 62,824,524 64,648,692 70,545,760 72,365,807


Source: U.S. Census Bureau

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