Soybean Exports and Change: Market Falls to a Nine-Year Low
Soybean exports are declining alongside the drop in price. Amid trade policy changes between the United States and China, the value of grain commodities continues to fall, with a steep decline in both soybeans and corn. Since January 1st 2018, according to Business Insider, the price of soybeans has fallen 6.3% overall, with the sharpest decline of 13.8% occurring in the past month.
This follows an already disappointing 2017 for U.S. soybean exports. According to data from Descartes DatamyneTM, while soybeans ranked third among U.S. exports overall, and accounting for 2.3% of total U.S. export value, the fourth-quarter soybean exports fell 20.1% and finished the year 5.4% below 2016. Poor weather and heightened competition from Brazil contribute to this decline.
First-Quarter U.S. Soybean Exports
Exports are now impacted by trade policy shifts between the U.S. and China, which is the top market for U.S. soybeans with a 57.8% share last year. On July 6th, a 25 percent tariff on U.S. soybean imports into China will take effect. Ahead of that, Chinese buyers have already slowed their imports from the United States. Compared to the same period in 2017, Chinese imports of U.S. soybeans have fallen 29.3% in total FOB value.
Other U.S. Soybean Export Markets
Overall, U.S. first-quarter exports of soybeans to countries other than China have held steady, only falling 0.67 percent. However, this is largely due to a substantial 208.5 percent increase in exports to Egypt, a $293 million increase in FOB value. Comparatively, each other major market has fallen in first-quarter exports, with the Netherlands seeing the largest drop at 44.2 percent, a $273 million drop in FOB value.
Options for Chinese Soybean Sourcing
Whether Chinese buyers will be able to replace the United States as their primary supplier of soybeans remains an important question as tariffs come into effect. China imports about 60 percent of all soybeans in the global marketplace.
Brazil has historically been the second largest supplier of soybeans to China, and Chinese buyers have already increased their imports from the South American country. According the data from Descartes Datamyne, Brazilian exports of soybeans to China have risen 4.89 percent in value compared to the same period last year, an increase of $514 million USD.
Additionally, China has announced that it will remove import tariffs on animal feed ingredients, including soybeans, from five Asian neighbors. This indicates China’s intention to seek alternative suppliers outside of the United States to keep up with demand.
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Date posted: July 2, 2018