Leeds: Are you still paying attention?

[caption id="attachment_166" align="alignleft" width="221" caption="Chief Executive Officer, Iowa Soybean Association"][/caption]

In this column in January of this year, I took a stab at trying to answer the question, “What is going to happen to soybean prices in 2009?”  As you may recall, after stating that global weather during the growing season would clearly have a large impact, I concluded the column by saying that if you really wanted to know what was going to happen to prices then you should pay attention to China.  If its demand for US soybeans stayed high, then soybean prices would remain higher.  So, are you still paying attention to China?

We just wrapped up the 2008/2009 marketing year and what a year it was for Iowa and U.S. soybean farmers.  For the third year in a row, U.S. soybean exports set another record with over 55% of the 2008 crop being exported.  The total value of these exports was $15 billion.  Here is the breakdown of bushels and bushel equivalents:

• 1.24 billion bushels of whole soybeans
• 318 million bushels (equivalents) of soybean meal
• 886,000 metric tons of soybean oil
• Total exports were 1.56 billion bushels and bushel equivalents

And what are the top five markets for US soybeans (whole beans)?

• China         686  million bushels
• Mexico         113 million bushels
• Japan         88 million bushels
• Taiwan         58 million bushels
• Indonesia         49 million bushels

Top four soybean meal markets?

• Mexico         56 million bushel equivalents
• Canada         47 million bushel equivalents
• Venezuela         25 million bushel equivalents
• Philippines         22 million bushel equivalents

India is our top soybean oil market followed by Mexico and Morocco.

But just consider the impact that China is having on our markets.  With Iowa harvesting around 500 million bushels of soybeans, all of our production still covers less than 75% of China’s imports of U.S. soybeans this past year.

Of course the flip side of this is how devastating it would be to our industry if the Chinese would suddenly stop or dramatically reduce their imports.  Given the Chinese government’s desire (and need) to increase meat production in China, I find this highly unlikely, but certainly something to keep in mind.

Given the importance of China to our markets, the Iowa Soybean Association will soon be making available to all members of the association a weekly electronic newsletter that will report on events in China, and most importantly, how these events or decision could impact you as an Iowa soybean farmer.  Written by reporters on the ground in China, our goal is to provide you with timely and relevant information so that you can stay abreast of emerging issues and opportunities in our largest export market.  Look for more details on this new service in the December issue of the Iowa Soybean Review.

Kirk A. Leeds, CEO