By volume, soybeans are the world’s fourth most widely grown crop. While some crops are consumed directly, the majority is further processed into soybean meal and oil by crushing. Significantly, soybean meal contains much protein, frequently used as animal feed.
Most uses for soybean oil are in food and, more recently, biodiesel. With over 10% of the total value of agricultural trade worldwide, soybeans and their derivatives are the most traded agricultural product. Since the early 1990s, the global business in soybeans and soybean products has multiplied.
In 2008–2009, it surpassed the trade in wheat and all other coarse grains. Significantly, the world trade in soybeans is anticipated to grow by 22%, soybean meal by 20%, and soybean oil by 30%, according to USDA Agricultural Projections to 2025.
In this article, we will look at major factors affecting global soybean and product trade projections.
Contents
Biodiesel
Given the rising demand for biofuels, particularly in the USA, soy is one of the most lucrative oil crops in the world and is currently one of the products used to make biodiesel. The high and erratic prices of energy derived from fossil fuels are to blame for this. Several nations, including Brazil and the USA, have established biodiesel development programs.
As a result, sustainable protein expanded in 2006–2007. Since 2006, Brazil’s biodiesel program has permitted 2% biodiesel to be added to petroleum-based diesel. In 2008, this percentage was mandated, and by 2013, it rose to 5%. Significantly, about 500,000 tonnes of vegetable oil was used for biodiesel in 2008.
Increased demand for livestock feed protein from soybean
The increased commercialization of pork and poultry production, which calls for feedstuffs with a higher minimum standard of quality in terms of energy and protein content, has been linked to an increase in the sourcing of livestock feed protein from soybeans. The use of soybean meal in feed (especially for pig, chicken, and rabbit) manufacturing is also becoming increasingly significant in response to changes in dietary habits, tastes, and consumer preferences.
More often than not, soybean meal is used as a source of protein for animal feed production, as opposed to fish meal as in the past. The drawbacks of using fishmeal as a source of protein for livestock feed include high levels of bacterial contamination (such as salmonella), which can cause serious production issues in poultry.
Profit and high price
Although combating soybean rust disease raises production costs, profit is the sole factor that propels soybean production in Brazil, where soybeans are still more profitable than other crops. Soybeans are generally beneficial for natural food and feed, but they have expanded into fiercely competitive markets that appear more beneficial to use as factory raw materials.
Technological development, trade liberalization, and involvement of multinationals
The production of oilseeds increased during the 1980s due to technological advancements and favorable price policies, changing land use. The adaptable soybean has continued to be used in new ways by researchers. Significantly, advanced research capabilities have increased soy production, marketing, and trade in Argentina.
The growth of the soybean market and trade in South America was greatly aided by the adoption of comprehensive commercial and financial liberalization measures. With such favorable policy conditions, the soybean industry in Brazil grew by 4.8% annually, especially on large properties, which account for most of the country’s soybean production.
Agribusiness has been driving the growth in commercial soybean production in Brazil, where 85% of farms are larger than 1000 hectares in the largest soybean-producing municipality. This is due to the capital-intensive and technologically advanced farming of vast land. Notably, only four companies accounted for 61% of soybean-based exports and 59% of soybean processing in 2005, demonstrating how agricultural trade liberalization led to growth for the large farms that dominate Brazil’s soybean subsector.
The global increase in human and livestock population and expansion of trade
A key factor driving the overall increase in demand for agricultural products is population, a demand shifter. Demand for soybeans is likely to rise due to the world’s constantly growing human and animal populations, particularly in developing nations. Due to China’s enormous population, the country has imported many soybeans over the past few years, significantly impacting the oilseed sector.
Another factor driving China’s demand surge was its WTO membership since 2002. China’s population growth will slightly increase domestic demand, affecting global demand and prices. Due to their desired feed qualities, soybean is more in demand as the world’s demand for animal products rises.
Bottomline
Based on the currently available evidence, this chapter has examined the current state and outlook of global soybean marketing and trade. As a crop primarily used in processed form and as an ingredient in producing numerous food and non-food products, soybean is primarily used by crushing and manufacturing industries. It is difficult to predict prices and comprehend the soybean pricing system because many different products are involved, including soybean meal, soybean oil, and soybean grain.