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SOYBEAN AND PRODUCTS
INTO THE NEXT MILLENNIUM
An Outlook for World and U.S. Soybean Trade
March 17, 1999
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SOYBEAN AND PRODUCTS INTO THE NEXT MILLENNIUM:
An Outlook for World and U.S. Soybean Trade
World Trade
World trade of soybeans is expected to increase in the next six years, but at a much slower pace than in the past 10 years.
U.S. soybean exports recovered in the 1990's with a solid growth rate of 5.9 percent per year (from a negative growth rate of 3.7 percent in the 1980's) but it is expected to slow down to about 1.4 percent per year in the next decade.
EUROPEAN UNION
The European Union is reaching a level of maturity as a market that implies almost zero growth for U.S. exports of soybeans and meal. The income level of the population is at the point where any additional increases in income are not allocated to food expenditures. Even if the local European production declines the additional demand from Europe is more likely to trigger a supply response from South America. The U.S. share in the European market this last year declined from 51 to 42 percent of total soybean imports and for soybean meal has stagnated at around 12 percent of total imports.
JAPAN
While Japan is our single largest market, soybean consumption is expected to increase only slightly by 2005/06 to 5.3 million metric tons (MMT), resulting in a marginal increase in soybean imports to 5.0 MMT. As is the case with the EU, Japan is a mature market with respect to soybean consumption. Further, increased liberalization of livestock product imports and reduced competitiveness of the domestic livestock industry are anticipated to depress domestic livestock production and demand for protein meal.
CHINA
China became a net importer of soybeans and meal in 1993/94. Economic growth and market reforms will continue to boost per capita incomes and meat consumption. Poultry production is expected to continue to rise rapidly due to strong domestic demand and increasing exports to other Asian countries, especially Japan. It is expected that China will have an import regime that favors imports of soybeans over soybean meal. Moreover, increasing shortages of vegetable oils and protein meals are likely to prompt further investment in new soybean processing facilities along China’s central and southern coastal cities.
The pace of future growth in China’s soybean and meal imports is highly uncertain and dependent on assumptions regarding economic growth, the rate of growth of livestock production, the evolution of feed rations, and the government’s trade policy response to rising imports of soybeans and meal. But the rate of growth should be rapid by any standard.
With 1.2 billion people and a 1.1 percent population growth rate, 13.5 million new people are added in the country every year. This compounded with economic growth of 6-8 percent per year will support demand for soybeans and products well into the next millennium.
China has a tremendous potential for soybean oil imports. The per capita consumption of vegetable oils is one of the lowest among the Asian countries.
Assessment of China’s future vegetable oil consumption and trade growth, given the size of the market constitutes a major uncertainty in the world trade outlook. The future responsiveness of the demand to income and prices will be critical to the trade outlook, and on the supply side small changes in China’s projected oilseed area or yield growth can have significant trade impacts. It is very likely that strong growth in consumption and imports will be sustained for some years to come although the level of demand met by imports will be impacted by government policies. China’s vegetable oil imports remain under state control and, as a result, future import decisions will not necessarily be based solely on market forces.
MEXICO
The recovery of the Mexican economy combined with NAFTA and the assistance of the GSM programs have elevated Mexico to our best market in terms of export growth. Our expectations are that this will continue to be the case for the next 5 years.
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Image: European Import Demand to Remain
Flat for the Next Six Years
Image: China's Import Growth Continuous into
the Next Millenium
Image: Vegetable Oil Per Capita Use:
Consumption Constrained by Policies
For more information contact George Douvelis at (202) 720-2494.
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