Agricultural shifts and uncertainties span the global soy marketplace, having a negative effect on soybean prices.
China has announced it will first lower, then end, the floor price for corn and replace it with a direct farmer payment, which is expected to increase Chinese soybean production. That means soybean import growth may slow as the full impact of the new policy unfolds. Meanwhile, South America’s soybean production growth over the next five years is projected to be seven times larger than that of the U.S.
Despite international challenges, there are areas of opportunity that offer a more optimistic outlook for soybean demand and prices. In fact, the overall long-term soybean outlook remains positive, with several areas of opportunity to expand soybean use beyond China with niche markets that provide price premiums for farmers.
1. High Oleic Soybean Oil
High oleic soybean oil is the most promising opportunity to reclaim a share of the 4 billion pounds of oil demand lost due to trans-fat labeling as well as expand demand for U.S. soybean oil abroad. High oleic soybeans also offer premium prices to farmers without a significant change to their production practices; early adopters have reported positive experiences and increases to their bottom line.
2. U.S. Soybean Meal Use
U.S. soybean meal use has started to rebound after a decade without growth and is expected to grow at a rate of 2 percent per year for the next five years.
3. Soybean Meal Use From the Asian Countries Besides China
Soybean meal use from the Asian countries besides China, such as Japan, Taiwan, South Korea and India, is often overlooked but is growing rapidly. Over the past five years, soybean meal use from these countries grew by 10 million tons, compared with 19 million tons for China.
4. Biodiesel Uses More Than 5 Billion Pounds of Soybean Oil
Biodiesel uses more than 5 billion pounds of soybean oil, about 25 percent of U.S. production. More importantly, biodiesel use of soybean oil could increase significantly beyond this volume – as much as an additional 2 to 3 billion pounds – if renewable fuels legislation favors expansion.
5. India’s Economy Continues to Develop
India’s economy continues to develop, pushing demand for protein meals to new highs. In fact, Indian soybean meal exports are declining and will no longer be significant. Over time, India should become an importer of soybean products, much like what occurred in China after 1995.
6. The Global Aquafeed Market Is Growing
The global aquafeed market is growing at 10 percent per year; soybean-protein products, such as soybean-protein concentrate, are essential for this market to grow.
7. Niche Markets
Niche markets, such as organic, non-GMO and others, are growing rapidly and providing premium-price opportunities to farmers. Organic and non-GMO food markets are growing at 10 percent to 15 percent per year with major companies, such as General Mills and Kraft, now producing many non-GMO food products.