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Last year (2007/08 harvest) the world produced over 220 million metric tons (MMT) of soybeans.  In the past 10 years (1997/98-2007/08), that figure has increased by 40% from 158 MMT.  There are two driving reasons behind the growing demand.  The first basis behind growing global production is the fact that the world is consuming more meat than it ever has.  Soybean meal is used as a high protein livestock feed.  Soybean meal production rose from 98 MMT in 97/98 to 158.4 MMT in last year’s harvest, an increase of 62%.  The other factor driving growth in soybean production is the use of bio-diesel.  Soybean oil is the main input in the production of bio-diesel.  Last year bean oil production was 37.5 MMT, which marks a 67% increase from the 22.4 MMT of production 10 years ago. It’s important to keep an eye on factors effecting the growth in production of soybean meal and oil, but it’s only part of the picture when looking at global soybean markets.

Soybeans, like any agricultural product, are produced in regions with suitable growing conditions.  Proper weather and soil nutrition are necessary.  For that reason, global soybean production is very concentrated.  The world’s leading producers of soybeans and their global market shares are: the U.S. (33%), Brazil (28%) and Argentina (21%).  Combined, these three countries alone account for 82% of global production.  Those same countries, in their respective order, were also the leading exporters, with almost 90% of the global market share.  Imports, unlike exports, are more spread out.  The discrepancy is that countries around the world are lacking the means to produce soybeans still consume them as a direct and indirectly through their consumption of meat.  China is the one exception, leading the way with 37.8 MMT, or 48% of global figures.  The top three importers accounted for 58% of the world’s imports, but 2-4 only made up 12%.

The global trade of soybeans has risen significantly over the past 10 years.  In 1997/98, 38.1 MMT of soybeans were traded on the open market.  That figure has more than doubled (107% increase) since then.  Last year 78.9 MMT of soybeans exchanged hands on global markets before reaching their destination.  It doesn’t matter if you trade soybean meal, crush, oil, or the bean itself; looking at domestic supply and demand figures is no longer enough if you plan to have a fundamental grasp of market conditions.

(USDA FAS- PSD database- World: Soybeans and Products Supply and Distribution)

(USDA FAS- PSD database- Soybeans: World Supply and Distribution)

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