External Market Factors Impacting US Soybean Meal USSEC Luncheon International Production and Processing Expo January 3, 213 Atlanta, GA Paul Smolen
Presentation Objectives Examine the economic drivers of trade flows impacting U.S. soy complex in general, and soymeal in particular. Determination of US competitiveness is mostly external. Key factors impacting the US soybean market environment. Competition for available crop land. Impact of ethanol policy on corn production and use. Impact of China demand on US soybean exports and crush. Impact of DDGS on US domestic soybean meal demand. Impact of South American SBM supplies on US export competitiveness. Impact of DET policy on Argentine crush profitability and product exports. Impact of transfat replacement and biodiesel on US SBO exports.
US soybean supply is limited by available crop land. Crop Land Competition for US crop land reduces available land for soybean production to 75 to 8 million planted acres. 42 bu/acre yields a 3.1 to 3.3 billion bu. soybean crop. Necessary rotation helps to maintain balance in plantings. Corn Soybeans 12 US Soybean vs. Corn Planted Acreage Ethanol Soybean Exports Millions of Acres Planted 1 8 6 4 2 Corn Soybean Beans to China Beans to ROW Crop Year SOURCE: USDA GATS,
US ethanol policy drives corn production; limits other usage. Crop Land Ethanol production consumes 5 billion bushels of corn Amounts to 4% of the 12.4 billion bushels crop. Requires 92+ million acres of corn at 149 bu/acre. Corn Soybeans Ethanol Soybean Exports Beans to China Beans to ROW Marketing Year Use by Sector (mln bu) Impact of Corn Use for Ethanol on Export Availability 14, 12, 1, 8, 6, 4, 2, export feed ethanol food & sweet SOURCE: USDA GATS,
China demand drives US soybean exports; competes with crush. Crop Land Overwhelming demand for soybeans by China limits export availability of US soybeans to traditional customers. Also rations soybeans available for US crush; thus limits supply of US soybean meal and oil. Corn Soybeans 3,5 US and Export (Sep-Aug Marketing Year) Ethanol Soybean Exports SB Usage ( mln bushels) 3, 2,5 2, 1,5 1, SB Export - China SB Export - ROW SB Crush Beans to China Beans to ROW 5 SB Marketing Year Beginning October SOURCE: USDA GATS,
China has gained share of SB exports from other US customers. Crop Land A combination of increased soybean demand from China, and alternative export supplies from South America have resulted in declining share of US exports to traditional European and East Asian destinations. Corn Soybeans 45 4 China SE Asia S Asia US Soybean Exports by Region Impact of Demand from China Ethanol 35 3 Mid East Africa Europe FSU Japan Korea Taiwan Soybean Exports 25 2 Americas 15 1 Beans to China Beans to ROW 5 1991 1993 1995 1997 1999 21 23 25 27 29 211 SOURCE: USDA GATS,
US soybean exports from West Coast ports have increased. Crop Land Asian demand for US soybeans has supported the expansion of US production to the north and west. Corn Soybeans US Soybean Exports - Volume by Port Region 45 Ethanol Soybean Exports Export Volume ( mt) 4 35 3 25 2 15 1 Lakes (Can) East Coast Gulf (Mex) Beans to China Beans to ROW 5 West Coast Marketing Year Ending August SOURCE: USDA GATS,
DDGS has displaced 3-4 mln mt of domestic SBM usage. Domestic soybean meal demand faces pressure from increased supply and consumption of DDGS DDGS supply pressures soybean crush margins Meals Oils 35, Expansion of Domestic and Export Use of DDGS US SBM Exports S. Am SBM Exports Domestic SBM Consumption Domestic & Export Use (mt) 3, 25, 2, 15, 1, 5, Domestic SBM Domestic DDGS Export SBM Export DDGS Domestic DDGS
Export demand for US SBM is driven by South.American availability. Meals Oils Export soybean meal demand is driven by competitiveness between US and Argentina/Brazil prices. South American crop conditions determine if ARG soybean meal needs to be rationed or more aggressively priced. Monthly FOB spread between US 48 SBM and ARG pellets 9 US SBM Exports S. Am SBM Exports Domestic SBM Consumption Domestic DDGS US 48 SBM MINUS ARG PELLETS (USD/MT) 8 7 6 5 4 3 2 1-1 -2-3 -4 MORE PRICE COMPETITIVE LESS PRICE COMPETITIVE ZONE WHERE QUALITY DIFFERENCE IMPACTS PURCHASE DECISION FAS/USDA OILSEEDS OCT 9 JAN 1 APR 1 JUL 1 OCT 1 JAN 11 APR 11 JUL 11 OCT 11 JAN 12 APR 12 JLY 12 OCT 12 JAN 13
US export flow determined by competitiveness at each destination. NW EU S EU OTH E EUR E EUR FSU NE ASIA SE ASIA S ASIA & OCEAN MIDEAST AFRICA N AMERICA C AMERICA S AMERICA U.S. Soymeal Exports by Destinations Oct 29 - Sep 21 vs prior year (1.) (.5)..5 1. 1.5 Change in Oct - Sep exports (Mln MT) NW EU S EU OTH E EUR E EUR FSU NE ASIA SE ASIA S ASIA & OCEAN MIDEAST AFRICA N AMERICA C AMERICA S AMERICA U.S. Soymeal Exports by Destination Oct 21 - July 211 vs. prior year (1.5) (1.) (.5)..5 Change in Oct - Jul exports (Mln MT) During the US 29-1 marketing year, US SBM exports to SE Asia jumped by 1.4 million MT as major shippers switched entire programs from Argentina. US exports also increased to NE Asia and Europe. During the US CY 1/11, improved conditions in South America increased soybean meal export availability. Argentina was able to compete again in world markets, reversing most of the gains by US 48 SBM a year earlier.
Brazil has become #1 soybean exporter 1 9 SB Crush and Exports: US, Argentina, and Brazil Combined and Exports (mln mt) 8 7 6 5 4 3 2 US Argentina Brazil SB Export SB Crush 1 Marketing year ending September
Argentine policy of DET stimulates growth of SB crush vs export. 12% SB Crush and Exports: Percent of Production Crush and Exports (percent of Soybean Production) 1% 8% 6% 4% 2% US Argentina Brazil Export - % Prod Crush - % Prod % Marketing year ending September
Argentina supplies 1/2 of world SBM exports; Brazil 1/4; US 1/8. 45 SBM Use: Domestic and Export: US, Argentina, and Brazil Combined and Exports (mln mt) 4 35 3 25 2 15 1 US Argentina Brazil SBM Export Domestic 5 Marketing year ending September
Argentina is most dependent on export demand. Must price to sell! 12% SBM Use - Domestic and Exports: Percent of Production Domestic and Export Use (percent of Meal Production) 1% 8% 6% 4% 2% US Argentina Brazil Export - % Prod Domestic % Prod % Marketing year ending September
Transfat concern has reduced demand for hydrogenated soybean oil Meals Oils The concern over transfat has reduced the demand for hydrogenated soybean oil and total consumption of soybean oil for edible uses. Other vegetable oils, in particular canola and palm, have gained share of the edible market depending on functionality provided. Oil Exports Domestic Consumption of Hydrogenated Oils vs. Non-Hydrogenated Oils (Edible Uses) Hydrogenated Oils Non-Hydrogenated Oils 12, Domestic Salad Oil Consumption Domestic Biodiesel Million Pounds 1, 8, 6, 4, Imported Oils 2, Decrease in use of Hydrogenated Oils Year
Increase in use for biodiesel has offset loss to hydro alternatives Meals Oils Domestic demand for soybean oil is impacted by the profitability of producing biodiesel Supply of oil for export is inversely related to domestic demand 25 US Soybean Oil Usage 22-12 Domestic Salad Oil Consumption Oil Exports Domestic Biodiesel US soybean oil usage (mln pounds) 2 15 1 Export Domestic M Ester Imported Oils 5 Domestic - Food Decrease in use of Hydrogenated Oils Marketing year ending September
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