As the United States enters the 2024/25 soybean marketing year this September, the global demand for U.S. soybeans has taken a significant hit, impacted by a robust U.S. dollar, slower economic growth, and uncertainties surrounding trade policies in an election year. Current export sales of new-crop soybeans have dropped to levels not seen since 2008, excluding the lows during the 2019 trade war.
A recent analysis from CoBank’s Knowledge Exchange highlights that while the start of the season has been historically weak, this doesn't necessarily predict the outcome for the year. "The early pace of soybean exports often doesn't correlate with the final numbers," said Tanner Ehmke, CoBank’s lead grain and oilseed economist. "Given the expected record harvest this fall and the ongoing weakness in soybean prices, we anticipate new export demands to emerge."
Despite the current challenges, particularly from reduced Chinese demand, the forecast isn't all bleak. Ehmke outlined several factors that could revitalize U.S. soybean exports in the upcoming months:
- Potential for a reduced South American harvest: If the Brazilian soybean harvest falls short of expectations due to La Niña-induced droughts, global buyers might turn back to U.S. soybeans.
- Increased demand from Europe: Starting December 30, 2024, the European Union will enforce new regulations requiring that soybean imports not come from deforested land. This could give U.S. soybeans an edge over those from South America.
- Economic recovery in China: Any rebound in China’s economy, spurred by potential rate cuts by the People's Bank of China, could increase Chinese demand for soybeans.
- Interest rate adjustments by the Federal Reserve: A cut in U.S. interest rates could strengthen emerging market currencies like Brazil's real, making U.S. soybeans more competitive internationally.
The period from September to December is critical, as it accounts for more than half of the annual U.S. soybean shipments. This year's performance during this peak period will be crucial in determining whether the U.S. can overcome its sluggish start. The full analysis is available in CoBank's latest research brief, "U.S. Soybean Export Sales Down, but Not Out."
