1. Global soybean demand has grown significantly over the past two decades, driven mainly by China's demand for soybeans for animal feed. 2. The top soybean producers are the United States, Brazil, Argentina, China, and India. However, China and India's domestic production only meets a small portion of their total demand. 3. The United States and Brazil are expected to continue dominating soybean exports to meet global demand. However, trade tensions have reduced U.S. exports to China, providing opportunities for Brazil and Russia to increase their market share.

1. World Soybean Trade: A Long Term View

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3. 1. DEMAND
2. SUPPLY

4. Over the past two decades, global soybean
demand has outpaced other commodities
such as corn, cotton, rice, and wheat.
Much of the growth was driven by China’s
growing demand for protein and vegetable
oil.

5. China is the world’s largest soybean importer.

6. China imports soybeans for use as animal
feed for its livestock, poultry and dairy
industry which have been booming as
Chinese citizens increasingly consume
protein-rich diets along with rising incomes.

7. Chinese citizens’
protein intake
has been on the
rise, but has yet
to catch up to
western nations.

8. China is already the world’s largest meat
importer but demand continues to grow.
China’s growing meat demand has pushed
up soybean demand in the European Union
– the world’s largest meat exporter.

9. India presents a tremendous growth driver
for soybean demand.
Incomes have been rising which has pushed
up Indians’ protein intake.

10. Yet, India’s average protein supply is slightly
more than half that of China’s indicating ample
room for growth.

11. According to a survey conducted by the
Indian Market research Bureau (IMRB):
• 73% of urban rich Indians are protein
deficient; and
• 93% of them are unaware about their
daily protein requirements.

12. With nearly 80% of Indian households
expected to rise to middle income status by
2030, up from 50% today, the U.S. Soybean
Export Council sees India as a prime export
market in the future.

13. 1. DEMAND
2. SUPPLY

14. The top five largest soybean producers are
the United States, Brazil, Argentina, China,
and India.

15. Although China is the fourth largest
soybean producer, domestic production
satisfies only about one-fifth of domestic
demand.
The shortfall is met with imports. Even if
China doubles domestic soybean
production, it would barely cover half of
domestic demand.

16. India has consistently been a net exporter of
soybeans but net exports have been unsteady as
demand outstrips domestic supply.

17. India became a net importer this year
having imported some 114,000 metric tons
from October 2019 to February 2020
according to USDA data.
As incomes grow and protein intake
increases, the country may well end up
becoming a consistent net importer, unless
they dramatically increase soybean yields.

18. India’s average soybean yields is just 25%that of the
United States.

19. That would leave Brazil and the United
States to continue dominating soybean
exports.

20. The fragility of U.S.-China relations may
put a damper on U.S. soybean exports to
China.

21. Projections made by the United States
Department of Agriculture (USDA) prior to
the Phase 1 trade deal for long term soybean
planting in the U.S. expected only marginal
increases and were not expected to recover
to pre-trade war levels.

22. Thus, the long term impact of losing China
as a soybean export market was clear.

23. Brazil is poised to profit from this potential
opportunity in the long run.
Agribusiness players such as Cargill, Bunge,
and ADM, could benefit from better South
American origination volumes.

24. In 2019, Cargill was
the largest soybean
exporter in Brazil,
followed by Bunge,
ADM, and Dreyfus.

25. Russia: a major beneficiary

26. Russia, the world’s second-largest wheat
exporter has been vying for a greater share
of China’s wheat imports.
There is tremendous opportunity for Russia
to carve out a greater share of China’s
soybean imports as well.

27. Russia’s soybean exports to China have
grown 51 times from just 15,000 metric tons
in 2013/14 to 763,000 metric tons in 2018/19.
This accounts for just 1% of China’s soybean
consumption currently.

28. However, the long term potential is
significant.
China’s top soybean producing region –
Heilongjiang - is just across the China-
Russia border from Russia’s top soybean
producing region – the Amur region.

29. Investing in the Amur region to realize its
potential as a soybean producing area could
offer China a cost-effective source of
soybeans with the added advantage that
Russian soybeans are non-GMO.

30. By comparison, 94% of U.S. soybean
acreage comprises GMO soybeans as of
2018.

31. The expected completion of two new
bridges over the Amur River (known as the
Heilongjiang river in China) which borders
Russia and China should greatly facilitate
soybean trade between the two countries.

32. With calls from China to set up a ‘soybean
industry alliance’ with strategic partner
Russia, it is highly likely Russia will
continue to take greater share of China’s
soybean imports going forward.

33. It’s not all gloom and doom for U.S.
soybeans however.
The EU is gradually phasing out palm oil as
a feedstock for domestic biodiesel, and U.S.
soybeans could be a beneficiary of this
move.

34. Accounting for 20.03% of the EU’s
biodiesel feedstock mix, the EU consumed
2,640 million liters of palm oil in 2019 for
biodiesel production according to data from
the USDA.
Soybeans’ share has increased slightly from
7.83% in 2013 to 8.35% in 2019.

35. Assuming the EU turns to soybeans to fill the
void left by palm oil, soybean use as a feedstock
for EU biodiesel production could double.

36. However, American soybeans will be fighting
against EU-grown rapeseed, soybean, and
sunflower oil for a chance at replacing the void
left by the palm oil subsequent to EU phasing it
out as a feedstock which indicates the
opportunity for American soybean farmers
looking to cash in on the EU opportunity will be
smaller. Nevertheless, it should still cushion the
blow.

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