U.S. Soy’s Value Reaches Record High Thanks to Strong Export Demands
- General News
The U.S. soy industry has set a record high for soybean exports with five months to go in this marketing year.
According to John Baize, who writes a weekly news article update for USSEC’s Soy News and monitors global soybean markets for the soy checkoff, huge demand from China is one of the drivers. Rising pork production, combined with South America’s transportation issues after last year’s harvest, have contributed to China stocking up on U.S. soybeans and soybean meal at a record pace. Such strong demand from China means that U.S. soybean reserves are at their lowest levels in nearly fifty years, but the value of soybeans has reached historic highs. “We have exported more than six million tons of soybeans to China than we did at this time last year,” said Mr. Baize. “China has bought up our soybeans, and we also have demand coming from other markets as well. We have already exported more soybeans in the current marketing year than we’ve exported in any marketing year in history. We still have five months left in the marketing year, too.”
This robust international demand has dipped into the U.S. soybean supply, giving the U.S. the lowest exports-to-reserves ratio at this time of year since 1965. Such demand adds up to potential profits for U.S. soybean farmers. “This is a perfect situation for U.S. soybean farmers,” Mr. Baize explained. “They sold their soybeans early in the marketing year at very high prices. We are short now, but will soon be bringing in soybeans from Brazil for a much cheaper price than we sold ours for. It’s a good situation that I think we will see often in the future.”
Each year, U.S. soybean farmers export more than half their crop. “China and other U.S. soy customers are important because we grow more soybeans than we use here in the U.S.,” said Jimmy Sneed, USSEC Board Member, United Soybean Board (USB) Director and Communications Target Area Coordinator. “Foreign markets are important to us because they allow us to continue to produce more soybeans and sell the maximum amount possible.”
Chinese pork production has increased 38 percent since 2000, and demand for more soybean meal to feed those hogs is pushing China’s purchases. Supplying those customers with high-quality soybean meal will help U.S. farmers remain the preferred supplier for this valuable soybean market.
With such high international demand, Mr. Baize feels that the value of U.S. soybeans has never been stronger. “Soybean demand is growing faster than demand for any other commodity. It is being driven by export demand, and China is the biggest driver. This year, 60 percent of the crop will be exported as soybeans, soybean meal or soybean oil. That’s a record high.”