Rising pork production, along with the transportation issues in South America after last year’s harvest, have China stocking up on U.S. soybeans and soybean meal at a record pace, according to a soy checkoff consultant. This has resulted in U.S. soybean stocks reaching their lowest levels in nearly a half-century, but it has also kept the value of soybeans at historic highs.
“We have exported more than 6 million tons more soybeans to China than we did at this time last year,” says John Baize, who monitors global soybean markets for the checkoff. “China has bought up our soybeans, and we also have demand coming from other markets as well. We have already exported more soybeans in the current marketing year than we’ve exported in any marketing year in history. We still have five months left in the marketing year, too.”
This international demand has dipped into the U.S. soybean supply, giving the U.S. the lowest exports-to-reserves ratio at this time of year since 1965. This adds up to potential profits for U.S. soybean farmers, Baize says.
“This is a perfect situation for U.S. soybean farmers,” Baize said. “They sold their soybeans early in the marketing year at very high prices. We are short now, but will soon be bringing in soybeans from Brazil for a much cheaper price than we sold ours for. It’s a good situation that I think we will see often in the future.”
Soybean exports are a major profit driver for U.S. farmers. Every year, they export more than half their crop.
“Export markets are very important to U.S. soybean farmers,” said Jimmy Sneed, checkoff farmer-leader from Hernando, Mississippi. “Domestic and foreign demand for soy has kept the soy industry profitable and requires us to be innovative and efficient. In order to meet demand, U.S. farmers must continue to produce reliable and high-quality product for our customers.”
Chinese pork production has increased 38% since 2000, and demand for more soybean meal to feed those hogs is pushing China’s purchases. Supplying those customers with high-quality soybean meal will help U.S. farmers remain the preferred supplier for this valuable soybean market.
With international demand so high, Baize believes that the value of U.S. soybeans has never been stronger.
“This is the golden age for soybeans,” he says. “We have record demand every year. Soybean demand is growing faster than demand for any other commodity. It is being driven by export demand, and China is the biggest driver. This year, 60% of the crop will be exported as soybeans, soybean meal or soybean oil. That’s a record high.”