The Soybean Triplets: Brazil, China, and the U.S.

Dr. Ken Rietz

March 28, 2024

The countries exporting the most soybeans are Brazil and the U.S., accounting for more than 80% of global exports of soybeans. The country importing the most is China, which consumes more than 60% of the global soybean imports. What I want to explore is the history of the interactions between these three countries and give some idea of the current state of affairs, and extend that to predict some direction for their future. Specifically, I will give some idea of where soybean prices are probably headed in the short term. First, of course, here is the graph of the front month futures for soybeans according to the CBOT.

Figure 1: The front month CBOT futures for soybeans, in USD per bushel

There is far too much history to cover it in detail, but an overview of what has happened in the past helps to understand what is going to happen in the near future. For many years through 2012, the U.S. exported more soybeans to China than Brazil, but not by a big margin since 2000. From 2013 to 2016, the top exporter to China shifted back and forth. From 2017 until the present, Brazil exported increasingly more to China, to the extent that in 2023, Brazil exported roughly twice as much to China as the U.S. There are several factors responsible for that dominance. Partly, Brazil was devoting increasing acreage to soybeans, and 2023 set a record for soybean production in Brazil, allowing it to sell soybeans at a relatively low price. Partly, China was trying very hard to avoid any interaction with the U.S., and so they cut back on U.S. soybean purchases. Besides, the U.S. soybean production for 2023 was slightly less than in 2022 due to inclement weather.

This leads straight into looking at the current situation. Right now, in the U.S., planting will not begin until the start of May, so planning is going on, deciding between soybeans and its main alternative, which is corn. Farmers are looking at the situation in Brazil to make these choices. The soybean situation in Brazil is not pleasant. They are at the beginning of their harvest season. The Brazilian agency that reports on crop progress, National Supply Company (Conab), has reduced its projections for total soybean production each of the past four months, again, mainly due to inclement weather. In the last month alone, the decrease was 1.7%. (The USDA’s estimates have also dropped, but not as dramatically.) The likelihood of Brazil producing another record crop of soybeans looks fairly slim. This reinforces the idea that the U.S. should increase its soybean production. Even if China continues its avoidance of the U.S. market and again buys most of its soybeans elsewhere, the global market is liquid enough for the U.S. to still sell its crop. But there are no guarantees. China also grows some soybeans, but nowhere near enough to be self-sufficient.

What, then, is the outlook for soybean futures? When the leading exporter of soybeans is unlikely to produce as much as it did last year, a drop in supply is likely. Depending on how much the U.S. is able to grow will have a significant effect, which in turn is a combination of how much is planted and the weather. But the scenario that is most probable is a higher price for soybean futures this year.