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Current Soybean Market and Poor Soybean Quality Impacting Producers
Author: Scott Stiles, Extension Economist


Scott Stiles, Extension Economist and Jeremy Ross, Extension Soybean Agronomist

October 24, 2018


In the article posted last week discussing the soybean quality problem being seen by producers in Arkansas (Poor Soybean Seed Quality Seen for a Second Year), several factors were discussed that could be contributing to the poor quality soybean seed being harvested.  Arkansas is not alone with this quality issue.  Over the past two weeks, other soybean agronomist and specialists have posted similar problems in other states.  Some of these other states include Kentucky, Iowa, Ohio, and Tennessee.  After talking to many producers and hearing testimony last week at the Joint Senate and House Committee on Agriculture, Forestry, and Economic Development meeting, many producers do not deny that a significant portion of the soybean crop harvested so far has poor seed quality.  The biggest complaints are the current soybean prices and discount schedules being imposed by elevators.  All of this is driven by the current soybean markets, and below is an explanation on how we reached this point.


The U.S. soybean trade landscape has changed noticeably in the last 12 months.   One key change pertains to China.  For the past decade China has been the number one export market for U.S. soybeans.  Currently (as of the week ending October 11), China’s position now sits at Number “3”.  Mexico and Argentina currently occupy the Number “1” and “2” slots respectively.  The table below illustrates the dramatic 92% year-over-year drop in export sales to China.  In bushel terms this equates to a decline of almost 433 million bushels in sales.  Some of the lost export business to China has been offset by sales outside of the Asia region.  However, overall U.S. sales of soybeans are down 21% or 200 million bushels compared to last year.











In the 2017/18 marketing year, Asian countries accounted for 87% of U.S. soybean sales thru the week of October 11.  China alone accounted for 67% of U.S. soybean sales.   Outside of the Asia region, 23 known countries accounted for the remaining 13% of U.S. soybean sales.












However, in the 2018/19 marketing year Asia’s share of U.S. soybean sales has declined from 87% to 40% thru the week of October 11.  Sales to the Asia region are down 415 million bushels from a year ago.  China’s share of U.S. soybean exports has slipped to just 8%.  Following the imposition of a 25% import tariff on U.S. soybeans earlier this year, Chinese buyers are relying more on alternative sources of soybeans. Instead of purchasing directly from the U.S, China has been increasing purchases from Brazil.  From January to August this year, China’s soybean imports from Brazil accounted for nearly 70 percent of its overall purchases.












As mentioned, soybean sales to the Asian region are down 415 million bushels from last year.  The U.S. has thus far been able offset about half of that decline with sales to other regions. The largest increase in sales volume this year has been in the Americas–specifically Argentina, Canada and Mexico.  Argentina is historically not a buyer of U.S. soybeans as they are the Number “3” producer in the world.  However, drought this year reduced Argentina’s soybean production by 632 million bushels from the previous year.


The landed cost of U.S. beans in China is currently similar to Brazilian soybeans even with the 25-percent tariff.  However, Chinese buyers are reluctant to purchase U.S. soybeans as they fear authorities may not approve cargoes and that import tariffs could increase again.  Record soybean production in Brazil and increases in Chinese soybean production this year are also obstacles against U.S. exports gaining much momentum in the winter months—which has typically been a critical export window for U.S. soybeans into the Chinese market.

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