Executive Summary

At the end of 2018, projections for soybeans reflected both an increase in the global consumption of protein but also a cautious take on tariffs. Uncertainty on the impact of both factors – one likely to cause demand to rise and one likely to have a more negative impact, have so far been met with positive news.

As the U.S. continues to extend its position in the global marketplace for soybeans, there are more considerations for international buyers of soybeans beyond price such as quality, consistent supply and sustainability that ultimately influence purchasing decisions.

This paper will feature projections for this year as well as the factors that will ultimately drive the 2019 soybean market globally.

Economic Outlook

Daniel O’Brien, extension agricultural economist with Kansas State University, has a clear message for international buyers of soybeans: “The economic outlook for soybeans is positive.”1

O’Brien, who helps lead the research and information found on http://www.agmanager.info, explains that the U.S. currently has a large stock of soybeans, but many factors indicate that may only be a temporary situation.

“Early numbers suggest that Brazil is having somewhat less of a crop than expected,” he says. “They were aiming for 120-122 million metric tons, and they are on track to end up around 115 million metric tons. There has been a lot of moisture in Argentina, so we’ll see how that works out. Unless they have too much moisture, it shouldn’t have a negative impact and Argentina should balance out Brazil, although Argentine soybeans are largely used for meal.”

Therefore, while the supplies of Brazil and Argentina balance each other out, the U.S. has a large stock of soybeans in the waiting.

“Growth in world soybean demand has been unabated since 2008-2009,” says O’Brien. “Soybean use was 230 million metric tons in 2008-2009. Demand dropped a little the following year. But with the development of the ethanol market, we have not had a decrease in any year since then. The projected usage of soybeans in the world in 2018-2019 is an estimated 348 million metric tons.”

He adds, “That’s a growth of 4.7 percent per year. Production has responded and has grown by 5.8 percent per year, but it has not been consistent. Over time, stocks have grown. We’ve had several years in a row of tremendous crops, so there has been a reset of supply and demand since 2012-2013.”

With the U.S. supply of soybeans remaining high, there are some potential factors that could reduce the stock faster than anticipated. Among the factors O’Brien notes are African Swine Flu outbreaks in China, trade agreements and weather conditions internationally and domestically.

“We’re still trying to figure out the impact of the African Swine Flu in China and the potential it has to impact their demand,” says O’Brien. “They have typically been the buyer for more than 60 percent of the world’s soybean imports.”

Even with trade challenges, O’Brien notes that if the U.S. and China do come to a trade agreement, China has expressed intent to buy a considerable volume of ag products.

“That volume could be a surprise to us,” he says. “So, government intervention could play a role and jump up exports. That would reduce our stock carryover, and in two years from now, we could even see being back to tighter supplies. Of course, if we have any major crop disruptions, that could also impact price and supply. There’s certainly some risk and uncertainty.”

A winter with excessive moisture has led to flooding throughout the Midwest, but the impact is still unknown. O’Brien says potential for a good amount of moisture in the spring brings the risk of delayed planting, but it’s still too early in the season to predict how that will materialize.

“The flooding has caused some disruptions to our rail system,” he says. “We won’t know what that impact is until we have to move grain. Fortunately, there are alternative routes, that may add to the logistical cost, but will still get grains from point A to point B.”

O’Brien says moisture will continue to be a factor to watch closely.

“We need to be watchful or rain. As it is said, ‘rain makes grain.’ As long as soybean farmers can get their crops in the ground in a timely manner, and we don’t have so much moisture that it impact quality, it should be a good year for U.S. soy.”

For international buyers, O’Brien suggests now is a good time to ensure a healthy year-round supply. Throughout the remainder of this paper, key factors that influence the soybean buying decisions will be highlighted.

Consistent Supply

Perhaps the single most important need to produce any given product is a consistent supply of the materials needed to develop the end product. Regardless, if soybeans are acquired to produce animal feed, oil production or food, having a reliable, dependable and consistent source is paramount. Here are the some of the components that go into providing a consistent supply of soybeans for international buyers.


A dependable, efficient transportation system is critical in not only delivering soybeans to buyers, but also in protecting price for both grower and buyer. In the publication, How the Global Oilseed and Grain Trade Works, it is noted: “The buyer in the destination market must consider several factors before selecting a supply region for sourcing his soybeans. These factors are freight, the guarantee of timely delivery and flexibility in shipping arrangements.”2

In a survey conducted by HighQuest Analytics of international soybean buyers, predictability and on-time deliveries, a direct result of the reliable infrastructure, have a significant financial impact. Among the financial implications were demurrage fees assessed when product is not loaded/unloaded on time; costs for storage with shipments delayed at ports; sales and inventory impacts caused by delayed shipments; and fluctuations in currency exchange rates and spot prices cause uncertainty with delays.3,4

According to the U.S Soy: International Buyer’s Guide, “Efficient rail systems, combined with an extensive barge infrastructure and an extensive highway system give the U.S. producer and world consumers easy access to U.S. soybeans and their products. As a result, the average cost of moving U.S. crops from farm to vessel is the lowest of any major grain and oilseed exporting country.”5

Among the reasons for a lower transportation cost in the U.S. is that the “total annual exports of all grains and oilseeds from U.S. export terminals seldom reach much above 60 percent of estimated total capacity. As a result, vessel congestion at U.S. export elevators is minimal.”5

The U.S. Soy: International Buyer’s Guide further reads: “By contrast, at some other soybean exporting countries, soybean vessels are often forced to wait 20 to 30 days in line to load. With daily costs for vessels ranging from $10,000 to $20,000 per day, the time a vessel spends waiting in line for its turn to load can prove very expensive. The buyer pays most of this cost directly to the vessel if he is the charterer or in the form of a higher price for the soybeans if his purchase is on an FOB basis.”5


There are a variety of factors that affect the quality of a soybean, such as seed and farm practices to handling and transportation. For the purpose of this paper, the focus is on a broader sense of quality control and standards.

In the U.S., the soybean marketing system has clear quality standards governed by contract specifications and government-regulated guidelines that control export inspection, sampling, grading and weighing of soybeans and other grain and oilseeds.4The Federal Grain Inspection Service is the U.S. Department of Agriculture’s division responsible for the standards and inspection procedures as they pertain to soybeans. In How the Global Oilseed and Grain Trade Works, the authors note: “FGIS has performed these functions remarkably well, and it has earned a well-deserved worldwide reputation while doing so. The existence of the system of official U.S. grading standards and an independent, impartial agency to perform the inspection and weighing functions are a distinct advantage for U.S. soybeans over other origins.”2

The U.S. Soy industry further outlines quality requirements through its certification program the Soybean Sustainability Assurance Protocol that will be further discussed in the next section of this paper.


Globally, there are numerous issues influencing the sustainability of soy. Concerns such as deforestation, herbicides, pesticides and environmental resource use all come into play. For international buyers of soy, sustainability is a critical consideration when it comes to brand and product reputation. Being able to share with end-users that soy used in a given product was sustainably grown, harvested and handled is vitally important.5

While there are many certification programs for soy globally, some carry more weight than others do. Consumers are quick to identify shortcomings in certification programs, and it is up to the soybean buyer and growers, working together, to address consumer concerns regarding sustainability.

In the U.S., currently 95 percent of all soybean farmers collaborate with the USDA to “create and implement farm-specific conservation programs.” According to USSEC’s publication U.S. Soy Sustainability Assurance Protocol – April 2018, “In the 2017 marketing year, more than 11 million metric tons of SSAP-verified sustainable U.S. soy were exported around the world.”

The U.S. Soy SSAP is an “aggregate approach audited by third parties that verifies sustainable soybean production at a national scale.”6The program is considered one part of the overall U.S. soybean industry’s sustainability program.

According to USSEC, SSAP was “positively benchmarked against the European Feed Manufacturers’ Federation’s Soy Sourcing Guidelines through the independent International Trade Centre.”6

In January 2019, the European Commission recognized the U.S. Soy industry’s SSAP program for certifying U.S soybeans “in compliance with sustainability criteria laid out in the European Unions; biofuels legislation. With this recognition. U.S. soybeans can now be used for biofuel production in the EU and count towards EU renewable energy targets.”7

Research and Innovation

The economics of soybeans are a driving factor behind where a buyer chooses to source their soybeans. Equally, if not more important than cost, is composition. Finding the desired balance of protein and amino acids is an ongoing quest for the likes of nutritionists and purchasing departments. A variety of factors such as farm management practices and climate can alter the composition of a soybean, making the work of finding the “best” bean for a given purpose a challenge.

Biotechnology researchers across the globe, from academia to corporate labs, are constantly working to develop new variations of seeds that produce desirable traits for various needs.

In the U.S., the soy industry invests heavily in partnerships and research to evaluate and improve upon soybean traits including protein content and amino acids while preserving yield. Meanwhile, others efforts explore new uses for soy such as in commercial applications, biodiesel and in the food industry. Sustainability and quality assurance efforts are ongoing such as in developing production methods to provide traceability with identity preserved (IP) soybeans.5


The global demand for soybeans continues to grow regardless of factors in the countries that produce the vast majority of the world’s supply. Keeping with demand by meeting the needs of international buyers requires a collaborative industry, not just a committed, knowledgeable grower.

For international buyers, economics and soybean content are valuable, but just as important should be a consistent supply made accessible through reliable infrastructure and quality assurance; sustainability; and research and innovation.