Industry

With Trade Balance Shifts, U.S. Soy Reliability should be our North Star

Despite challenges spanning the pandemic, trade uncertainty and unpredictable weather conditions over the past couple of growing seasons, U.S. Soy’s prospects remain bright as export growth and increased world demand continue to drive the U.S. soy industry’s progress forward.

But real threats to U.S. agricultural producers have emerged. Given trade balance shifts, free and reciprocal trade is paramount for our U.S. soybean farmers to remain competitive on the world stage. Even during these circumstances, U.S. Soy proved its grit and tenacity as it was confronted with several obstacles this 2020 growing season when deemed ‘critical infrastructure’ by the U.S. government amidst the pandemic. It’s demonstrated that our long-term viability is massively dependent on maintaining status as a steadfast and significant supplier to the global network that depends on our product.

Continuing to grow production along with global demand and providing a reliable supply of U.S. soybeans is a point of pride and should always be our north star. The U.S. cannot afford to open the door for other soy-producing countries to infringe on the markets we’ve worked hard to cultivate, while they exponentially increase their soybean production, especially when we have sustainability as a key differentiator at the forefront of our portfolio. Up against the rampant fires in the Amazon Rainforest, sourcing U.S. Soy offers our customers a simple solution to global challenges – as we’re the number one country in the world for preservation of public forestry lands.[1]

To add to this, world demand for soy continues to rise, which will ensure that all suppliers have a seat at the table. But emphasizing our competitive advantage of sustainability, quality and reliability will only become more important to our importers as the health of our planet continues to be a key focal point for consumers worldwide.

 

Record U.S. Soybean Yields and Growing World Demand

While the COVID-19 pandemic created substantial losses of more than $4.7 billion for U.S. soybean farmers and crushers between January and June 2020[2], the resiliency of our U.S. soybean farmers and other facets of the soy value chain will pull us through, and we anticipate a return to more stable markets for U.S. Soy in the coming year. Indeed, there are already positive signs as we approach harvest – the U.S. Department of Agriculture (USDA) has projected U.S. soybean farmers to harvest a record yield of 53.3 bushels per acre and a near-record crop size of 4.425 bushels per acre.[3]

Meanwhile, global demand for soy is rising, and the United States is well-positioned to be the premier supplier of choice. World demand is up 16.0 million metric tons (MMT) year over year, outpacing a 10-year trend of +11.3 MMT/year.[4]

 

U.S. Soy Advantage is Key Differentiator

U.S. Soy holds a strong competitive advantage when it comes to sustainability, quality, and reliability.

Demand for sustainability continues to be a pressing consideration when sourcing soy. U.S. farmers take great care to protect and nurture their land, on which the USDA has encouraged soil conservation programs since 1935. In 2013, the U.S. Soybean Export Council (USSEC) responded to customer requests for a supply of documented and certified sustainable soy and worked with a multi-stakeholder group of consumers from around the world, non-governmental organizations (NGOs) and farmers to develop the U.S. Soy Sustainability Protocol (SSAP), which verifies the sustainability of exported U.S. Soy. Year to date, 40% of U.S. soy exports are verified under the SSAP, making it the largest sustainability verification scheme in the world.[5]

U.S. Soy’s reputation as a high-quality product is another key attribute that our customers desire, and this year, a new comprehensive study reinforced U.S. Soy’s reputation as a global leader in nutrient density and economic value. A meta-analysis of eighteen different studies with 1,944 samples quantified the relationship between country of origin of the bean and the chemical composition and nutritive value of the soybean meal. Not only does U.S. soy meal show an advantage relative to higher sucrose levels, superior amino acid profile, higher digestibility, increased metabolizable energy and lower fiber content (when compared to other origins) but it also has a price advantage. When comparing cost reductions, premiums of U.S. soybean meal range from $14.57 to $23.24 per tonne over Argentine soybean meal and range from $2.48 to $10.26 per tonne over Brazilian soybean meal.[6]

And the U.S. remains a reliable supplier and open for business during these uncertain times. In addition to our growers being poised for another bumper crop, U.S. infrastructure and logistical support remain functioning at full capacity to support the ongoing efforts by soybean processors, agricultural export facilities, grain inspectors and our farmers.[7] And our transportation system continues to upgrade its capabilities. A $2 million soy checkoff investment for research, planning, analysis, and design spurred a $245 million investment from the federal government and the state of Louisiana to deepen the Mississippi River from 45 to 50 feet, between Baton Rouge, Louisiana, and the Gulf of Mexico. This will increase the load potential by up to 500,000 bushels per ocean vessel, offering our international customers more efficient shipping and easier access to U.S. Soy. Meanwhile, the U.S. has invested nearly $1 billion to upgrade the Pacific Northwest ag supply chain, in the past 10 years, ranging from increased rail capacity to new rail terminals and expansions to dredging of the Columbia River. [8]

 

New Export Opportunities Await

Our success as a commodity relies heavily on the international market for U.S. Soy. Today, 60% of U.S. soybeans are exported as beans, meal, and oil. However, when considering exports of animal protein fed in the U.S. with soybean meal and exports of biodiesel produced using soybean oil as a feedstock, the total rises to 2/3 of U.S. soybeans exported as either whole beans, co-products, animal protein, or energy.[9]

Maintaining and growing export markets for U.S. Soy is critical to our long-term success. While the U.S. soy industry has long been focused on market diversification, it ramped up its efforts as the trade situation with China unfolded. USSEC has been laser focused both on existing relationships abroad and investing in new ones to evolve emerging markets, identifying factors like growing populations, improving economic conditions and addressing protein deficiency among populations. In addition, there isn’t a day that passes without our team taking steps to ensure continued or improved market access for U.S. Soy in various markets around the world – this is critical work that we deem table stakes to ensure U.S. Soy has open access to key global markets.

Bangladesh, Pakistan, and Egypt are shining examples of successful emerging U.S. soy markets. From 2015 to 2019, these markets have shown tremendous growth for U.S. soy exports. Exports of U.S. whole beans, meal, and oil to Bangladesh grew by nearly 50% in volume, representing a value of roughly $1.2 billion in 2019.[10] U.S. soy exports to Egypt nearly quintupled in volume during that same time period, with a value of approximately $1 billion in 2019.[11] And in Pakistan, U.S. soy exports tripled in volume, valued at roughly $1.1 billion in 2019.[12]

Our farmers remain committed as they head toward this season’s harvest with many bright spots ahead to increase global demand for U.S. Soy. But stopping now isn’t an option – whatever challenges come our way. Sustainability, quality, and reliability sets us apart as the world’s premier supplier of soybeans. And while we recognize U.S. Soy’s accomplishments that we’ve worked so hard to achieve over the last several decades, we must press forward to create more opportunities as we evolve with these trade balance shifts while continuing to ensure that U.S. farmers and the U.S. industry capture their fair share of the continued growth in global soy demand that will certainly happen in the years to come.

 

[1] United Nations Food and Agriculture Organization

[2] National Oilseed Processors Association/United Soybean Board COVID-19 Losses for U.S. Soybean Crushers & Farmers Report.

[3] USDA, August 2020 WASDE report

[4] USDA, August 2020 WASDE report

[5] U.S. Soybean Export Council

[6] https://ussoy.org/u-s-soybean-meal-quality-and-economic-benefits/

[7] https://ussoy.org/u-s-soy-industry-strives-to-maintain-export-channels-supply-chain-of-high-quality-soy-amidst-covid-19-concerns/

[8] Soy Transportation Coalition

[9] USDA, USB Market View Database (https://marketviewdb.centrec.com/)

[10] USDA, U.S. Department of Commerce

[11] USDA, U.S. Department of Commerce

[12] USDA, U.S. Department of Commerce

Jim Sutter
Jim Sutter

Chief Executive Officer

U.S. Soybean Export Council

Jim has worked on behalf of the U.S. agriculture industry for more than 35 years.