World exports of soybean complex in 1964 accounted for 34.7 percent of world soybean production while in 2012 that percentage had nearly doubled to 63.4 (169.7 MMT). Exports are far more important to soybean producers than they are to corn farmers, with corn exports accounting for 10.7 percent or world corn production in 2012.
Much of the recent soybean export boom has been driven by China which, as we noted earlier, ramped up its unprocessed soybean imports in 1995. In the 1998-2001 period, it was China’s imports of soybeans that provided a bright spot on an otherwise dismal agricultural commodity price picture. And, as corn ethanol production roared to the fore in recent years, the competition between corn and soybeans for planted acres has lifted the price of all storable agricultural commodities.
China moved into the soybean complex import market in 1994 when it increased its imports of soybean oil by 1.1 MMT to 1.7 MMT. The following year China not only began to increase its soybean imports (0.8 MMT), it also boosted its soybean meal imports to 1.2 MMT, up from 50 thousand metric tons a year earlier. In 2012, China’s imports of soybean meal fell to 20 thousand metric tons while soybean oil imports were 1.6 MMT.
China’s imports of the soybean complex accounted for 5.3 percent (3.5 MMT) of world soybean complex exports in 1996. By 2012, China’s share of world soybean complex trade had increased to 35.7 percent (60.6 MMT). In absolute terms China’s soybean complex imports increased by 57.1 MMT (54.6 percent of world soybean complex trade). Without China’s 57.1 MMT increase in soybean complex imports over the 1995-2012 period, the pressure on suppliers like Argentina, Brazil and the US would have been much lower, as the result of diminished competition for acres between corn and soybeans over that period. As a result farmers would have seen lower prices for their soybeans and corn. China’s soybean complex imports were clearly responsible for the prosperity soybean farmers have enjoyed over the last two decades.
The USDA estimates that in 2011 China held 15.9 MMT of unprocessed soybeans as ending stocks, 114.2 percent of its domestic consumption. With tight world soybean supplies and reduced production in 2012, China used 4.3 MMT of its stocks to meet increased domestic consumption, reducing the ending stock percentage to 98.7.
In less than two decades, China has gone from meeting virtually all of its domestic soybean complex needs with domestic production to the point where domestic production equals just 16.9 percent of domestic consumption. While China seeks to maintain self-sufficiency in grains, it clearly has made an exception to its self-sufficiency policy for soybeans.
Source: Daryll E. Ray and Harwood D. Schaffer, Agricultural Policy Analysis Center, University of Tennessee