Global Markets: Oilseeds – China Key to Slow Pace of U.S. Soybean Exports

The pace of U.S. soybean exports continues to lag behind last year. Accumulated soybean exports through late December, as reported in the January 5 U.S. Export Sales report, show a 14 percent decline in trade since September 1. This is nearly 5 million tons below the mark reached in 2016 when 33 million tons of exports were reported.

This slower pace squarely resides with China where U.S. trade is more than 20 percent below last year. In contrast, shipments to other markets, while roughly a third of the volume to China, are up 8 percent.

The slowdown in U.S. exports is primarily a result of last season’s record crop in Brazil, which boosted total supply by nearly 18 million tons. With record supplies available for export on September 1, Brazil exported over 11 million tons in the final 4 months of 2017, more than a three-fold increase over the same period in 2016.

Much of this increase was business to China, which more than offsets the trade from the United States. With the start of the 2018 Brazilian harvest just weeks away, the prospects of a near-term brisk uptick in the pace of U.S. sales to China are limited.

However, the current forecast for a slightly smaller Brazilian harvest in 2018 should alleviate some of the competitive pressure U.S. exporters faced in 2017.

North Africa’s Growing Appetite for U.S. Soybeans

The North African countries of Egypt, Tunisia, Morocco, and Algeria are among the fastest-growing consumers of soybeans and soybean meal. For example, soybean meal consumption in 2017/18 is forecast to rise 5 percent, supported by a strong 5-year average protein meal consumption growth and a positive economic outlook.

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The North Africa region is an important market for the United States, as it accounted for 1.2 million tons of soybean exports in 2016/17 (Sep-Aug) or 2 percent of total U.S. soybean exports. The region is forecast to import almost 3.3 million tons of soybeans in 2017/18, which could create additional opportunities for U.S. growers.

The U.S. share in the soybean market has been climbing over the last 5 years and reached 44 percent in 2016/17. The United States maintains an especially strong presence in Egypt which has helped retain market share. Egypt is the most important market with imports of over 900,000 tons in 2016/17.

The country’s crush industry continues to grow as the poultry and aquaculture industries remain strong. FAO estimates chicken meat production at over 1.0 million tons. According to the U.S. Soybean Export Council, Egypt produces over 1.0 million tons of aquaculture products annually with tilapia the primary species.

Soybean market shares for Brazil and Argentina have been on the downtrend, offset by growing shipments from Ukraine. The country’s geographic proximity and favorable pricing is taking over the South American market share, especially due to easier financing of small cargoes from the Black Sea region.

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