Since 1990, world soybean demand has gone up 150 percent, rising significantly compared with other commodities. Much of this increase is due to economic growth in countries such as China and India. As their economies grow, so does their peoples’ desire to improve the quality of their diets, leading to greater consumption of animal protein. Demand for soy meal for poultry and livestock feed has skyrocketed as a result.Click here to see more...
With growth like this, how can U.S. soybeans compete better in the global market and how can they continue to compete against other commodities? Longtime U.S. soy industry consultant John Baize addressed these questions at the recent Illinois Soybean Profitability Summit.
During the last three to four years, the soybean industry enjoyed strong demand and high prices. However, according to Baize, the soybean industry needs to commit to staying competitive over time. Baize says soybean farmers should aim to produce as efficiently as possible and maximize yields to get the greatest return on land and increase profits. He says, “As economies in other countries continue to grow, so will soybean demand”.
Below are additional observations from Baize.
Global Production and Consumption
Since 2000, global production and consumption have remained fairly even, and Baize believes the biggest limiting factor of consumption is lack of supply.
Projections show a growth in demand of over 235 million bushels for the coming year. Baize believes it could be much higher, depending on what the world can afford. Even with high prices and poor economic conditions around the world – particularly in the United States and Europe – demand is still continuing to grow, due to better economic conditions in China and India. Imagine what demand might look like if the economy improves.
Staying Competitive in the Global Market
Even with widespread drought conditions, the United States still produced more than 3 billion bushels of soybeans in 2012. Baize believes that if the weather cooperates, farmers could see record production exceeding 3.3 billion bushels this year. However, no matter how many bushels U.S. farmers produce, their share of the global market is going down. Once topping out at 42 percent of global soybean production, the United States is now down to 30 percent – not because U.S. farmers are producing less, but because the rest of the world is producing more. Baize notes that the United States is running out of land to produce a soybean crop. More than a decade ago, the value of the U.S. soybean crop was approximately $12.6 billion. Today, that value has gone up to $43.1 billion.