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RAW MATERIALS ▶▶▶


Global soybean market is changing


The US used to be the top soybean supplier for China, but the trade war has dried up the flow of soybeans from the US to China. This is stated in a new report from Dutch bank ABN Amro.


BY CASPER BURGERING, SENIOR ECONOMIST INDUSTRIAL METALS & AGRICULTURAL COMMODITIES AT ABN AMRO


A Output


s a result of the changes in the main suppliers, global trade flows and the structure of the global soybean market have changed. China buys most of its soybeans from Latin America and that conti-


nent has made strong advances in the soybean market over the last years. This can have an effect on the use and souring of soy as a feed ingredient. Soybean meal is still the most im- portant protein source used in many countries to feed farm animals. Soybean meal is the by-product of the extraction of soybean oil. However, due to sustainability and ethical issues, the use of soy protein in livestock diets is being critically looked into. In a recent report, Dutch bank ABN Amro looked specifically into the changes that are seen on the world mar- ket when it comes to trade of the soybeans. The main find- ings from this report are mentioned below.


Trade flows US-China have dried up In April 2018, China announced an import tariff on soybeans from the US in retaliation for the import tariffs on steel and


Table 1 – Productivity and efficiency in soybean by country (in % growth).


2013-2018 Harvested


US 29 17 Brazil 32 Argentina


China 40 India


World 27 12 19


Yield 10 11


13 -8 23 21


11


13 -5 19 12


13 ▶ ALL ABOUT FEED | Volume 27, No. 3, 2019


Increase EU imports of US soybeans Because the price of soybeans in the US has fallen over the past few months due to weaker demand from China and Chi- na is willing to pay an extra premium for Brazilian soybean, the EU has started buying more soybeans from the US. In the first 27 weeks of the 2018/2019 marketing year, EU imports of soy- beans from the US increased by 112% year-on-year. As a result, EU imports of soybeans from Brazil – the largest supplier of


aluminium that were imposed by the US. As a result, the trade dispute between the US and China escalated further and caused the soybean price on the Chicago Stock Exchange to fall to its lowest level in ten years (until mid-2018). Trade flows in soybeans between the US and China dried up very quickly. All-in-all, exported volumes of soybeans from the US dropped by more than 30% in 2018. China, however, remains heavily dependent on foreign deliveries of soybeans, since the country is the largest consumer of soybeans in the world. China accounts for nearly 30% of global demand for soybeans and about 65% of the total export market is destined for Chi- na. To satisfy their hunger for soybeans, the Chinese started looking at Brazil and Argentina as their main suppliers.


PHOTO: HANS PRINSEN


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