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“The United States is going to become the warehouse for global soybean supplies”

Summary:
That’s a quote from Paul Burke, regional director for North Asia at the U.S. Soybean Export Council, in Time. He continues “This is the realization that we’re coming to within the trade within the last couple of weeks.” The Chinese plan is — in addition to relying on Brazil and Argentina — to switch to other sources, like palm mill, rapeseed, sunflower seed, and other countries, such as Russia, Ukraine and Kazakhstan, for soybeans. Obviously, the development of other countries’ ability to grow soybeans will take time. But that was also true for Brazil. There is some discussion that China might not need to rely on US soybeans even in the short term. From SCMP (August 2): Ma Wenfeng, an analyst from Beijing Orient Agribusiness Consultant, said China had been importing far more soybeans

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That’s a quote from Paul Burke, regional director for North Asia at the U.S. Soybean Export Council, in Time. He continues “This is the realization that we’re coming to within the trade within the last couple of weeks.”

The Chinese plan is — in addition to relying on Brazil and Argentina — to switch to other sources, like palm mill, rapeseed, sunflower seed, and other countries, such as Russia, Ukraine and Kazakhstan, for soybeans. Obviously, the development of other countries’ ability to grow soybeans will take time. But that was also true for Brazil.

There is some discussion that China might not need to rely on US soybeans even in the short term. From SCMP (August 2):

Ma Wenfeng, an analyst from Beijing Orient Agribusiness Consultant, said China had been importing far more soybeans than it really needed and could do without US imports in the short run.

Ma said farmers had been using more soybean meal than was needed in pig feed because there was so much available at low prices.

China imported a total of over 95 million tonnes of soybeans last year, while the demand was 63 million tonnes, he noted.

The “surplus” 32 million tonnes – which Ma defined as beans that were unnecessarily consumed – was close to the amount of imports from the US.

He said the use of excess soybean meal had meant farmers were using less corn meal and as a result the state reserves have plenty of corn meal that farmers could use to feed their animals.

Here’s a picture of cumulative Brazilian soybean exports over the years. Notice 2018 is higher than 2017, which itself was higher than in 2016.

“The United States is going to become the warehouse for global soybean supplies”
Source: Karen Braun.

So, no wonder US soybean prices have not recovered, as some observers predicted, even as the new market year has begun.

Source: barchart.com.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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