Soybean meal is the main raw material for animal feed in industrial agriculture around the world, and is an important source of protein in pig and poultry farming. Therefore, the production and import of soybeans is usually used for meat production, but in addition to being used in the industrial field, soybean meal is also made into human food such as tofu, soy milk, and artificial meat. Soybean meal is produced through a pressing process, in which whole soybeans are processed into soybean meal and soybean oil.
Soybeans and corn take turns to become the most widely cultivated crop in the US every year. Brazil is the world's largest producer of soybeans, ranking first in the world in soybean exports, while China is far ahead in terms of soybean meal production. Although China is not a major importer of soybean meal, it is the world's largest importer of soybeans, thus supporting its huge pressing industry. China is a major producer of soybean meal, but exports very little: soybean meal produced domestically is mainly used to meet domestic animal husbandry needs. Brazil is the main country of origin of soybeans imported from China.
Top 10 countries/regions for soybean meal market 2022/2023
Source: US Department of Agriculture Overseas Agriculture Service (USDA FAS) production, supply, and demand data
In the last full sales year, Brazil had a leading position in soybean meal exports, second only to China and the US in terms of soybean meal production. Argentina ranked second in the world in soybean meal exports in the 2022/2023 sales year, and is expected to rise to the top position this year. Almost all of its domestic production is used for exports. The EU, on the other hand, is the world's largest importer of soybean meal. Since the beginning of this century, its soybean meal imports have been almost 70% higher than local production. During this period, 98% of the internal consumption of soybean meal in the EU was used for animal feed. At the end of the 20th century, more than half of the soybeans used in the US were used for press processing. However, in the past 20 years, the proportion of soybean exports has increased, reducing the share of domestic pressing and processing. Although in the 2015/2016 and 2021/2022 sales years, the share of exported soybeans exceeded domestic pressing usage, domestic pressing regained its dominant position in the current sales year.
Soybean consumption in the US
Source: USDA Oilseed Crop Yearbook
The share of US soybean meal exports varies from year to year, and fluctuates drastically. The Philippines is the main recipient of soybean meal from the United States, and the country's meat industry is extremely dependent on imported soybean meal. Over the past 30 years, domestic consumption of soybeans in the US has shown an upward trend, driven by demand for soybean meal, soybean oil, and exports.
Top 10 destinations for US soybean exports (kg)
Source: UN Commodity Trade Statistics Database
Although the US soybean meal export ratio has remained high in recent years, it has been observed that US soybean meal exports reached a record 13.2 million tons in the sales year ending September 2023. The vast majority of soybean meal produced in the US complies with the US Soybean Sustainability Guarantee Agreement, which is a validated framework to ensure the sustainable procurement of US soybeans. Since 1980, the average amount of cultivated land required per bushel to grow soybeans in the US has decreased by 47%, water consumption has been reduced by 61%, and energy consumption has been reduced by 45% (in British thermal units). Greenhouse gas emissions and soil erosion were reduced by 42% and 35%, respectively (in pounds of carbon dioxide equivalent per bushel and tons of soil erosion per bushel).
Domestic consumption of soybean meal in the United States
Source: USDA Oilseed Crop Yearbook
Over the past 10 years, Brazil's strength as a producer and exporter of soybeans has continued to grow, and as China's imports have increased, the relationship between Brazil and China has continued to develop, making it the most dynamic force in the complex soybean market pattern. In the first 10 years of growth in China's soybean imports, the US was the main country of origin. However, in the last 10 years, nearly 57% of the soybeans imported from China came from Brazil.
Country of origin of soybeans imported from China
Source: UN Commodity Trade Statistics Database
Before biodiesel and national blended fuel policies brought soybean oil to the cutting edge of the biofuel sector, the market generally believed that soybean pressing was mainly to meet demand for soybean meal. Now, as renewable energy standards continue to create a strong policy market for soybean oil, soybean meal and soybean oil together form the demand base to drive soybean production and pressing. Since the beginning of this century, the share of domestic soybean oil consumption used as a renewable fuel has surged almost negligible to close to 50% in the most recent crop year. Domestic pressing volume increased by 35% during this period, indicating that additional pressing was driven by fuel demand. As mentioned earlier, the increase in pressing volume completely changed the soybean meal market pattern.
As the complex soybean industry landscape continues to evolve, CME will continue to be the preferred platform for market participants to hedge risks or express market views.