Highlights

Brazil's soy exports to almost double    China to account for 80 percent of growth    Import demand may shift from seeds to cheaper meals   Increased yield to account for most of growth in production

February 14, 2008

 

Global soy trade to soar 35 percent in the next decade

 

 

World soy trade is projected to rise rapidly, climbing more than 27 million tonnes (35 percent) during the next decade, according to the "USDA Agricultural Projections to 2017" released Tuesday (14 February 2008).

 

World trade in soy and soy oil would each grow at an average annual rate of 3.3 percent through the projection period, compared with 3.1 percent for soy meal, the report stated.

 

China will continue to be the dominant soy importer while the EU, surpassed by China in 2002, would be the top soymeal importer.

 

The projections assume that Chinese policies will support maintaining domestic

corn production and importing soy. Thus, China accounts for 80 percent of the

world's 27-million-tonne growth in soy imports over the next 10 years.

 

Significant investments in oilseed crushing infrastructure by China drive strong gains in soy imports as the country seeks to capture the value added from processing oilseeds into protein meal and vegetable oil, the report said. 

 

China is among a group of countries with limited opportunity to expand oilseed production and hence would continue investment in oilseed crushing capacity. Others in this group include countries in North Africa, the Middle East, and South Asia.

 

As a result, import demand for soy and rapeseed would grow rapidly.

 

China's expansion of domestic crushing capacity would significantly influence world trade by raising global import demand for soy and other oilseeds rather than for oilseed products, the report said.

 

However, strong competition in international protein meal markets is expected to shift some of the import demand from oilseeds to cheaper meals. The competitive pressure of new oilseed crushing capacity is expected to result in some inefficient crushers going out of business, the USDA report stated.

 

Global Soy trade
 

Global trade in soy and soy products has risen rapidly since the early 1990s, and has surpassed not only wheat--the traditional leader in agricultural commodity trade--but also total coarse grains.

 

Soy's lead over other grains is likely to be expanded throughout the next decade due to continued strong growth in global demand for vegetable oil and protein meal, particularly in China.

 

In the coming decade, overall gains in global grain trade come from a broad range of countries, particularly from countries in Africa and the Middle East and China.

 

East Asia's trade outlook is dominated by a continuing shift from importing feedstuffs to importing meat and other livestock products. As a result, this region's import demand for protein meal and oilseeds does not rise during the coming decade despite rising meat consumption.

 

Soy planting

 

As grains compete for limited cropland, higher prices would result and bring previously uncropped land in Brazil and Indonesia into soy and palm oil production.

 

Growth in total area planted to all crops rises less than a half-percent per year in most countries. Area expansion occurs more rapidly in countries with a reserve of available land and policies that enable farmers to respond to higher projected world prices. Such countries include Brazil, Argentina, other South American countries, some

Eastern European countries, and Ukraine.

 

Two-thirds of the growth in global production would be derived from rising yields, although the growth rate in crop yields has slowed somewhat during the last several decades and is projected to continue to do so, the report said.

 

However, the slow increase in crop production would be partially offset by slowing growth in world population, even as demand continued to increase due to rising incomes and biofuels. 

Brazil
 

Brazil's rapidly increasing soy area enables it to gain a larger share of world soy and soy meal exports, despite increasing domestic feed use.

 

Soy exports are projected to almost double, enlarging it share of world exports of soy and soy meal from about 30-35 percent in recent years to 43 percent by 2017.

 

With continuing area gains, Brazil maintains its position as the world's leading soy exporter.

 

Combating soy rust disease increases production costs. However, because of increased domestic demand for soy meal for feed and soy oil for human consumption and biodiesel production, soy remain more profitable than other crops in most areas of Brazil.

 

Land in southern Brazil will shift from oilseed to corn production during the middle of the projection period in response to higher corn prices and more limited competition from US corn exports.

 

Still, with expanded soy plantings in the Cerrado regions, the growth rate for Brazil's soy planted area is projected to average nearly 3.5 percent a year, reaching about 31 million hectares by 2017..

  

US
 

In the United States, reduced soy acreage and increased domestic crush limit exportable supplies, but their competitiveness is aided by depreciation of the U.S. dollar.

 

Argentina
 

The expansion in Argentine soy area slows as incentives to grow other crops improves. Argentina's export tax rates are higher for soy than for soy products. This favors domestic crushing of whole seeds and exporting the products. Also, Argentina is projected to divert some land from soy to corn. As a result, Argentina's soy exports

remain around 8 to 9 million tonnes.

 

EU
 

The EU set-aside rate is assumed to be zero during the projections. Except in 2008, most land previously set aside will be planted to rapeseed destined for biodiesel production. The EU, once the world's leading importer of soy until 2002, would see declines in soy imports due to increases in grain and rapeseed meal feeding and soymeal imports.

 

Others

 

The three leading soy exporters--the United States, Brazil, and Argentina--have accounted for more than 90 percent of world trade in recent years. Their market share is projected to decline to slightly less than 90 percent as exports rise from minor exporting countries, such as Uruguay, Paraguay, and Bolivia.

 

As Argentina seeks to operate its expanding crushing facilities at full capacity, it is projected to import 4 million tonnes of soy from Brazil, Paraguay, Uruguay, and Bolivia by the end of the period.

 

The last three countries are likely to expand exports 40 percent to more than 9 million tonnes.

 

Russia and Ukraine respond to higher international market prices for oilseeds by increasing production of rapeseed and soy. Although rapeseed production will be most affected, soy exports are projected to increase, the report said.