by Mario Moreno, Senior Economist, IHS Maritime and Trade
Key points
- World seaborne exports of soybeans forecast to edge down in 2016.
- China is the world’s top importer of soybeans, while the US and Brazil are the top exporters.
- China contributed most to growth in the global demand for soybeans during 2015.
Analysis
World seaborne exports of soybeans decelerated pace in 2015 to an estimated 2.5% growth rate, after expanding by 11% in the prior year. Demand from top export market China slowed, possibly linked to higher ending stocks, while demand from Taiwan and Thailand declined.
For 2016, world seaborne exports of soybeans are anticipated to slip by one-third of a percent, partly owed to weather concerns. El Nino caused mixed regional precipitation, but was more damaging in Brazil this season. Overly wet weather has led to rust fungus outbreaks in southern Brazil and overly dry weather is drawing concerns on pod filling in the northern and central parts of the country.
China continues to be the world’s largest importer of soybeans
China is by far the biggest importer of soybeans, by metric ton volume, accounting for an estimated 64% of the market in 2015, up from 38% ten years earlier, as rising incomes have triggered diet diversification. The European Union (EU) follows with a 13% share, down from a 25% share ten years earlier, while Japan is only taking 2% of the market.
China contributed most to import growth during 2015
In 2015, China contributed an estimated 2.4 percentage points to growth in the world seaborne import trade of soybeans (estimated at +2%), while Taiwan and Japan subtracted from growth by 0.17 and 0.33 percentage points, respectively. Despite the ongoing macroeconomic headwinds experienced across the EU, soybean demand remained positive. Demand for soybeans is expected to be modest this year as domestic production in the EU rises.
The US and Brazil together account for 80 percent of the world seaborne soybeans export trade
The U.S. and Brazil are the largest exporters of soybeans, together taking 80% of the world seaborne export market. It seems both countries alternate the top spot, with Brazil being the largest exporter this past year, and the U.S. as the largest exporter in the prior year.
Over the years, Brazil has made major investments in its agricultural sector and gradually pursued policies to boost production. U.S. exporters certainly face strong competition from Brazil, more so now when the dollar is quite strong.
Inverse correlation between US soybeans exports and the dollar
Over a 15-year period, demand for U.S. soybeans has grown almost two-fold, as measured by ocean export volume data provided by IHS World Trade Services. Determinants of soybeans demand are several and include, population growth, income growth, global production, trade policies, and price. From 2000 to 2015, the correlation between U.S. seaborne exports of soybeans and the U.S. dollar was measured at minus -46%.