U.S. soybean export sales fall to historic low – CoBank

Global demand for U.S. soybeans fell sharply as international buyers remain discouraged by a strong dollar, slowing economic growth and uncertainty about the direction of U.S. trade policy in an election year, AgriMarketing reported, citing a CoBanka press release.

The U.S. enters the 2024/25 marketing year on Sept. 1 with historically low soybean export sales. According to a new summary study from CoBank’s Knowledge Exchange, the pace of early season soybean export sales historically has a low correlation to final export performance for the marketing year.

With a record U.S. soybean crop expected this fall, continued price weakness is likely to attract new export demand. USDA estimates U.S. soybean production will reach a record 124.9 million tons in 2024-2025. “The U.S. soybean export program will face a number of headwinds in the coming weeks and months, especially due to weaker demand from China,” said Tanner Ehmke, lead economist for grains and oilseeds at CoBank. “But a slow start to the pace of export sales doesn’t necessarily mean it will be a bad year for U.S. soybean exports. We see potential for several events that could support exports later this year.”

The peak shipping period for U.S. soybeans runs from September through December, and typically more than half of all shipments for the season occur in these four months before the South American crop arrives. China typically accounts for the majority of U.S. soybean export sales. After record imports from Brazil, Chinese orders for new crop soybeans from the U.S. are among the lowest levels in two decades. China is not alone in its current reluctance to buy U.S. soybeans. Total U.S. new crop exports are the lowest since 2008, barring a trade war low in 2019.

Ehmke pointed to four key factors that could reverse the sluggish pace of soybean exports. A smaller-than-expected South American soybean crop, increased European demand for soybeans from uncut forested areas, falling U.S. interest rates and a rebounding Chinese economy could help boost U.S. soybean export demand next year. The U.S. Department of Agriculture is currently forecasting a record Brazilian soybean crop of 169 million tons. However, low prices could discourage Brazilian farmers from expanding soybean acreage as planting begins in the coming weeks. The La Niña phenomenon is also expected to occur this September, which could negatively impact Brazilian soybean yields.

It is also expected that a new round of demand for U.S. soybeans in Europe will arise when regulations regarding imports and deforestation come into effect. Starting December 30, 2024, new imports into the EU must be certified as coming from land that has not been deforested in the last decade. This gives U.S.-origin soybeans an advantage over South American soybeans in the European market.

The economic recovery in China may also lead to an acceleration in soybean purchases. The Chinese government is expected to aggressively cut interest rates in an attempt to stimulate the country’s faltering economy. An economic stimulus that boosts consumer demand for meat in China could lift demand for both soybeans and soybean meal, experts expect.

Finally, interest rate cuts by the Federal Reserve could also bring money back into emerging markets like Brazil, strengthening Brazil’s currency against the U.S. dollar. A stronger Brazilian real against the U.S. dollar would give U.S. soybeans an advantage in the export market.

Tags: export, soybean, USA