Soybeans

Soybean is the common name for the annual leguminous plant and its seed. The soybean is a member of the oilseed family and is not considered a grain. The soybean seeds are contained in pods and are nearly spherical in shape. The seeds are usually light yellow in color. The seeds contain 20% oil and 40% protein. Soybeans were an ancient food crop in China, Japan, and Korea and were only introduced to the U.S. in the early 1800s. Today, soybeans are the second largest crop produced in the U.S. behind corn. Soybean production in the U.S. is concentrated in the Midwest and the lower Mississippi Valley. Soybean crops in the U.S. are planted in May or June and are harvested in autumn. Soybean plants usually reach maturity 100-150 days after planting depending on growing conditions.

Soybeans are used to produce a wide variety of food products. The key value of soybeans lies in the relatively high protein content, which makes it an excellent source of protein without many of the negative factors of animal meat. Popular soy-based food products include whole soybeans (roasted for snacks or used in sauces, stews and soups), soy oil for cooking and baking, soy flour, protein concentrates, isolated soy protein (which contains up to 92% protein), soy milk and baby formula (as an alternative to dairy products), soy yogurt, soy cheese, soy nut butter, soy sprouts, tofu and tofu products (soybean curd), soy sauce (which is produced by a fermentation process), and meat alternatives (hamburgers, breakfast sausage, etc).

The primary market for soybean futures is at the Chicago Board of Trade. The CBOT’s soybean contract calls for the delivery of 5,000 bushels of No. 2 yellow soybeans (at contract par), No. 1 yellow soybeans (at 6 cents per bushel above the contract price), or No. 3 yellow soybeans (at a 6 cents under the contract price). Soybean futures are also traded at exchanges in Brazil, Argentina, China, and Tokyo.

Prices – Soybean futures prices fell to a 2-year low of $8.79 per bushel in October 2009 but then traded sideways to higher the first half of 2010. Soybean prices were dampened during the first half of 2010 after the USDA in May 2010 projected a 92% y/y increase in 2010/11 U.S. soybean carry-over to a 4-year high of 360 million bushels along with an increase in global soybean carry-over to a record 66.99 MMT. As the summer crop progressed, beneficial weather prompted the USDA to forecast a U.S. soybean crop of 3.345 billion bushels, the second largest in history. Despite expectations for ample global supplies and a bumper U.S. soybean crop, prices rallied into year-end and finished 2010 on a 2-1/4 year high of $13.94 per bushel, up +34% for the year. Strong Chinese demand was the main bullish factor in 2010 after Chinese imports of U.S. soybeans rose to a record 54.8 MMT, up 29% y/y, which prompted the USDA in December 2010 to hike its 2011 U.S. soybean export forecast to a record 1.59 billion bushels. Strength in soybean prices continued into 2011 after January China soybean imports rose +26% y/y to 5.14 MMT. This voracious demand, along with persistent dollar weakness, lifted soybean prices to a 2-1/2 year high of $14.56 per bushel in February 2011. For 2011, the USDA is projecting an +0.8% y/y increase in U.S. soybean planted acreage to a record 78 million acres, although this remains to be seen as record cotton prices may prompt some farmers to plant more cotton. The US soybean stocks/use ratio for 2010/11 is tight at 4.2%, but with expected bumper crops from Argentina and Brazil, the two largest soybean producers after the U.S., the world stocks/use ratio is near average at 22.8%.

Supply – World soybean production during the 2010-11 marketing year (Sep-Aug) fell by -1.5% yr/yr to 256.102 million metric tons. World soybean production has more than quadrupled from the 62 million metric ton level seen in 1980. The world’s largest soybean producers were the U.S. with 35.4% of world production in 2010-11, Brazil (26.7%), Argentina (19.3%), China (5.6%), and India (3.7%). China’s soybean production has roughly doubled since 1980. Brazil’s production has risen just over four times since 1980.

U.S. soybean production in 2010-11 rose by +1.7% yr/yr to a new record high of 3.375 billion bushels. U.S. farmers harvested a record high of 76.616 million acres of soybeans in 2010-11, which is up +0.3% yr/yr. The average yield in 2010-11 is down -1.1% yr/yr to 43.5 bushels per acre, just under the record high of 44.0 bushels per acre. U.S. ending stocks for the 2010-11 marketing year (September 1), rose by +9.2% to 150.9 million bushels, still above the 3-decade low of 112.4 million bushels seen in 2004-05.

Demand – Total U.S. distribution in 2010-11 fell -0.2% to 3.355 billion bushels. The distribution tables for U.S. soybeans for the 2010-11 marketing year show that 49.3% of U.S. soybean usage went for crushing into soybean oil and meal, 47.4% for exports, and 3.3% for seed and residual. The quantity of U.S. soybeans that went for crushing fell -5.5% yr/yr in 2010-11 to 1.655 billion bushels. The world soybean crush rose +7.5% yr/yr in 2010-11 to a new record high of 225.161 million metric tons, which was about double the level seen in 1993-94.

Trade – World exports of soybeans in 2010-11 rose +6.3% yr/yr to a new record high of 98.648 million metric tons. The world’s largest soybean exporters in 2010-11 were the U.S. with 43.9% of world exports, Brazil with 32.7% of world exports, and Argentina with 11.8% of world exports. U.S. soybean exports in 2010-11 rose +5.9% yr/yr to a new record high of 43.273 million metric tons. Brazil’s soybean exports have more than doubled in the past decade and Canada’s exports have almost tripled.

World imports in 2010-11 rose +9.6% yr/yr to a new record high of 95.869 million metric tons. The world’s largest importers of soybeans in 2010-11 were China with 59.5% of world imports, the European Union with 14.6%, Japan with 3.6%, and Mexico with 3.8%. China’s imports in 2010-11 rose +13.2% yr/yr to a record level of 57.000 million metric tons, which is far from negligible levels prior to 1994.

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here