USDA Soybean Baseline, 2010-19
Each year, USDA updates its 10-year projections of supply and
utilization for major field crops grown in the United States,
including soybeans (see Overview
of the USDA Baseline Process for more information). One key use
of the projections is as a reference from which to analyze the
impacts of potential policy changes affecting U.S. agriculture.
This discussion summarizes the analysis underlying the soybean
projections for 2010-19. Details about the projections for the U.S.
macroeconomy, other U.S. crops, U.S. livestock, the U.S.
agricultural sector, and global agricultural trade can be found in
the Agricultural Baseline
Growth of the U.S. soybean industry could slow over the next 10
years as it faces stronger foreign competition and U.S. farmers
shift acreage into feed grains. Although net returns for soybeans
might rise to uncommonly high levels, they could be low relative to
corn and gradually limit U.S. soybean acreage. In the projections,
soybean production declines initially (2010/11-2011/12) and then
increases incrementally with a modest improvement in yields and
planted acreage. The expected growth in U.S. soybean supply should
allow for a moderate rise in domestic use and exports. However,
exporters from South America are expected to garner most of the
expansion in global trade for soybeans and soybean products, much
of which will center on meeting a rapidly rising demand in
Several factors underlie the long-term trends that will
determine the size of U.S. soybean crops during 2010-19.
U.S. soybean planted area may have peaked.U.S. soybean acreage
expanded throughout the 1990s as farm program changes increased
planting flexibility and encouraged more farmers to incorporate the
crop into their rotations. In 2009, planting delays for spring
grains and favorable relative prices prompted farmers to sow a
record 77.5 million acres of soybeans.
Although expected net returns for planting soybeans might become
less attractive throughout the Corn Belt, it continues to expand in
areas historically dominated by small grains (the Northern Plains
in particular). Stagnant spring wheat yields and the development of
better yielding short-season soybean varieties adapted to the
northern climate have facilitated a shift away from wheat toward
soybeans. For instance, soybean acreage planted in North Dakota has
more than doubled since 1999. Soybeans have been welcomed into
Northern Plains crop rotations to help break the cycle of wheat
diseases and, unlike in more traditional soybean producing regions,
returns per acre favor soybeans over many other crops.
Recent U.S. soybean yields have been excellent. While soybean
acreage is still expanding into northern and western parts of the
country, those areas tend to have lower yields than the core
midwestern production region. This expansion and a tapering off of
the yield gains from narrow-row planting have slowed the upward
trend in the national average yield. Throughout the 1990s, adoption
of narrow-row planting practices benefited soybean yields as it
usually increased the number of pods per acre. In more recent
years, there has been a clear shift away from 7- to 8-inch rows
toward 15-inch rows in an effort to improve air circulation and
combat disease-related yield losses. In 2009, ample summer moisture
led to a record yield of 44 bushels per acre. Incidences of Asian
soybean rust in the United States have been limited to the South,
where losses have been minimized by timely application of
Over the next 10 years, several long-term trends will determine
domestic and foreign demand for U.S. soybeans and soybean
products.Exports from South America have expanded rapidly. South
American soybean harvests have set record highs nearly every year
for almost a decade. Over the past 5 years, exports from the region
have surpassed U.S. foreign trade in soybeans. However, that trend
was interrupted for the 2009/10 marketing year (September-August).
In 2008/09, Argentina suffered from a historic drought that slashed
soybean production and exports. In Brazil, the 2008/09
soybean area was constrained by high production costs and poor
financing. Although Brazil's exports in 2008/09 soared to
fill the void from Argentina's small crop, carryover stocks were
drawn unusually low. Consequently, U.S. exports for 2009/10 are
expected to increase to a record high due to a higher supply and
low stocks in South America.
It should not take long for Brazil to regain export supremacy as
production costs of its soybean farmers are very competitive
relative to U.S. producers. Tempering the profitability of growing
soybeans in Brazil, however, are the high fuel prices that raise
transportation costs from producing regions to export markets.
Long-term improvements in Brazil's transportation infrastructure
must be completed before the country can more fully realize its
massive potential in global agricultural markets. Also, the
growth in Brazil's soybean area will be heavily influenced by the
country's exchange rate against the U.S. dollar, which affects
domestic prices for soybeans.
Domestic soybean use not dynamic. Intense
competition from soybean processors in Brazil, Argentina, and, more
recently, China has eroded foreign soybean meal markets away from
U.S. crushers. China has also imported large amounts of U.S.
soybeans that would otherwise have been available for crushing.
Domestic crush margins have suffered from a declining supply and
comparatively weak prices for soybean meal and soybean oil. In
addition, domestic consumption of these products has not grown very
much. Consequently, the domestic crushing pace is starting to slow
down even earlier in the year.
Growth in domestic soybean meal use is gradual.The low rate of
growth in U.S. soybean meal consumption is determined by a
comparatively slow expansion of meat production and a rising supply
of substitute protein feeds. Also, over the last decade, intense
competition from soybean processors in Argentina and Brazil with
U.S. crushers has gradually cut into the U.S. share of foreign
markets for soybean meal and soybean oil. China's processors
have also imported large amounts of U.S. soybeans that could
otherwise have been available for domestic use. Lackluster domestic
use and the pressure of foreign competition kept U.S. prices for
soybean meal and soybean oil comparatively low. Thus, whenever
soybean supplies fell, profit margins of domestic processors would
stagnate. Over the past 4 years, however, record domestic supplies
of soybeans have improved the economic conditions for U.S.
processors, while adverse weather has disrupted crop supplies for
Brazil and Argentina. In addition, an expansion of biodiesel
production throughout the world is raising the value of soybean oil
relative to soybean meal. In order to produce soybean oil for a
growing biodiesel industry, its joint output with soybean meal is
creating a larger exportable surplus of meal.
Biodiesel is leading consumption gains for soybean oil.For the
past 5 years, food demand for soybean oil has stagnated as food
manufacturers have sought out vegetable oils that are low in
trans-fatty acids. Eventually, a wider distribution of
low-linolenic and high-oleic soybean varieties could diminish these
disadvantages. Offsetting the weak food demand are gains in U.S.
production of biodiesel, which uses soybean oil as a major
feedstock. New construction of biodiesel production
facilities was accelerated by passage of a Federal tax incentive
starting on January 1, 2005. The exemption, which was extended
through 2009, provided a Federal excise tax credit (at 1 cent per
gallon for each percent that is used in a fuel blend) to blenders
using biodiesel. Until early 2009, a majority of the output
was exported. Recent exports were reduced due to the abolition of
the blending credit for re-exports of biodiesel imports and the
European Union's imposition of countervailing duties on imports
from the United States. Biodiesel contributes to the
lubricity needs of low-sulfur diesel fuel, as required under
recently implemented emission standards. Biodiesel now accounts for
about 13 percent of the domestic use of soybean oil.
Although U.S. exports of soybean oil are expected to increase in
2009/10 to a record high, rising demand for soybean oil in domestic
biodiesel production will likely constrain them in subsequent
years. Since 2003/04, the United States has been a net importer of
all vegetable oils and a continued expansion of biodiesel output
would amplify the trend. Considerably higher costs for
vegetable oils and competition from biodiesel imports would temper
the industry's growth.
Projections for U.S. Soybean Supply and Use
U.S. soybean projections for 2010-19 include the following
Projected soybean acreage initially declines and stabilizes later.
In 2010 and 2011, planted soybean area in the United States is
expected to decline. By the spring of 2010, it is assumed that
producers will react to the price pressure from bumper South
American harvests. Most of the reduction will come from producers
switching to corn in the traditional Corn Belt, although some will
be in the South due to lower double-cropping with wheat and
substitution with cotton. Despite lower acreage, total 2010/11
soybean supplies are projected to increase moderately due to a
larger carryover from 2009/10. The 2010/11 carryout could be even
bigger and is projected to depress the 2011 soybean acreage to 73.5
million acres. Soybean acreage could recover to 76 million acres by
2014 and remain steady through 2019. It is assumed that a
reduction in the maximum enrollment for the Conservation Reserve
Program will help return more than 2 million acres of cropland in
2010, which in later years could help support U.S. soybean
Steady yield gains allow for modest growth in soybean
production.U.S. soybean yields are projected to rise on average by
0.4 bushel per year, based on regional yield trends for 1960-2009.
The national average soybean yield is projected at 42.8 bushels per
acre in 2010. Soybean acreage is expected to shrink for 2 years,
gradually increase for 3 years, and then plateau. Rising yields (to
46.5 bushels per acre by 2019) would likely provide the majority of
the output gains during the period. The projections assume no
extreme weather or extensive outbreaks of soybean rust, which could
reduce yields and raise production costs in any of the projection
Gradual output growth supports
domestic needs and U.S. exports. Assuming lower acreage in 2010/11,
supply could expand moderately due to ample carryover stocks.
Thereafter, a slowly rising supply is projected, supporting a
gradual increase in domestic use and exports. Domestic
crushing could increase moderately toward 1.86 billion bushels by
2019/20. Assuming a steady increase in domestic demand for
soybean meal and soybean oil, the soybean crush is projected to
rise by 15-20 million bushels per year.
In 2010/11, large expected supplies by export competitors could
reduce U.S. soybean exports to 1,300 million bushels.
Assuming a strong expansion of foreign exports, the U.S. share of
the global market could be reduced within 10 years to 38
percent-compared to 45 percent for 2009/10. Nevertheless, rising
foreign imports could boost U.S. soybean exports to 1,455 million
bushels by 2019/20.
The U.S. export share of the world soybean oil market is also
assumed to shrink for several years as domestic users take more of
the available supplies (particularly for biodiesel). Foreign import
demand for soybean oil should stay robust, though. Vegetable
oil imports by the European Union (EU-27) are expected to rise
rapidly to meet ambitious targets for biofuel production. In South
America, rapidly growing domestic markets for biodiesel will likely
compete for soybean oil supplies and constrain exports.
The U.S. share of global soybean meal exports is benefiting from
ample supplies in 2009/10 and may reach a record 10.2 million
tons. In subsequent years, however, the market share should
gradually erode despite growing in absolute terms. U.S.
soybean meal exports are projected to edge up to 9.8 million short
tons by 2019/20 from 9.4 million for 2010/11.
Soybean prices stable near a historically high level. Over the
next decade, there may only be a slight increase in domestic
soybean stocks, rising to no more than 7 percent of total use in
any year. Throughout the next 10 years, the U.S. average soybean
farm price is expected to range near $9.20-$9.25 per bushel. Such a
price level may not be sufficient encouragement to increase U.S.
soybean acreage, though, given that corn may have superior
comparative returns. Eventually, however, the prices are seen
capable of soliciting a strong supply response from South American
producers, who would find them sufficiently attractive.
Following a strong increase for soybean meal values in 2008/09,
prices have started to ease in 2009/10 and could remain mostly
steady thereafter. Processors may be compensated for the
steady soybean meal prices with rising values for soybean oil,
which would strengthen crush margins. Soybean oil prices are
assumed to be supported by a worldwide tightening of the vegetable
oil market, accelerated by expanding global biodiesel
Projections for World Soybean Trade
During 2010/11-2019/20, gains in world soybean trade will
probably moderate from the 7-percent annual growth in
1999/2000-2008/09, but the upward trend is far from peaking. Global soybean trade is projected to rise nearly 3 percent
annually to 104 million metric tons in 2019/20.
Chinawill dominate world soybean imports.The growth in China's
soybean imports is assumed to dwarf all other countries, accounting
for 78 percent of the projected gain in world trade by 2019/20. By
2010/11, the volume of soybean crushing in China could surpass that
of the United States, the world's current leader. That development
would likely promote a faster growth rate for global soybean
imports than for soybean meal and soybean oil . However, any disparity in the rates of
consumption between protein meal and vegetable oil in China could
temper that expansion. China's imports of vegetable oil will likely
rise, provided that its consumption continues to grow faster than
its domestic demand for protein meal (and including its ability to
export possible meal surpluses). China has already surpassed India
as the world's largest importer of soybean oil.
The regions likely to tally most of the remaining import gains
for soybeans are Latin America, North Africa, and the Middle East.
In contrast, soybean meal consumption for the EU has slowed in
2009/10 due to improved domestic crops of grains and oilseeds. For
the following years, EU demand could erode gradually as use for
other oilseeds, particularly rapeseed, is assumed to expand. This
would prompt only modest growth in EU imports of soybean meal and a
moderate reduction in soybean imports. Also, weak gains for
feed demand in Japan and Taiwan (a consequence of rising meat
imports) are likely to elicit minimal gains in soybean imports by
Brazilcloses the gap on U.S. production and exports of
soybeans.The United States, Brazil, and Argentina collectively
account for more than 90 percent of world exports of soybeans,
soybean meal, and soybean oil. Although the same 3 countries
will stay on top, Brazil is projected to satisfy most of the growth
in global soybean exports. By 2019/20, Brazil will approach the
United States as the world's leading soybean exporter.
Argentina should continue to dominate world exports of soybean
meal and soybean oil, as the country's modest domestic use and
differential export taxes make it comparatively economical to
process soybeans there. Argentina is assumed to maintain taxes on
soybean exports at a higher rate than the exports of soybean meal,
soybean oil, and biodiesel, which favors demand by domestic
processors. However, as Argentina closes in on its practical limits
for productive farmland and the production of soybeans, production
and exports by Brazilian processors could gradually gain market
share. Argentina may see its soybean exports drift lower so that
the country's large crushing industry can operate near full
capacity. That domestic supply could be supplemented with rising
imports (mainly from Paraguay), provided that Argentina restores a
tax incentive that was formerly provided to soybean imports.