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Europe poised to buy more U.S. soy

Article cover photo
David Green, a consultant with GreenOrange International Public Affairs, talks trade in the European Union recently with Iowa Soybean Association leaders. (Photo: Joseph L. Murphy/Iowa Soybean Association)

By Matthew Wilde, ISA senior writer

Iowa Soybean Association (ISA) leaders have an opportunity to help the United States become Europe’s top soybean supplier as predicted by Rabobank International.

One of the best ways farmers can do that, European experts say, is simply talk about their operations and tout the benefits of U.S. soy. Ten ISA board of directors and Market Development Director Grant Kimberley embarked on a two-week, soybean checkoff-funded European Union (EU) Learning Opportunities Mission on July 21.

Stops include Ireland, the United Kingdom, Denmark, Hungary and Austria. ISA leaders will meet with government officials, soybean buyers, industry stakeholders and farmers to learn about food needs, build relationships and highlight U.S. sustainability practices.

ISA President Bill Shipley of Nodaway said the trip comes at an opportune time as China’s new 25-percent tariff on U.S. soybean imports erode market share in the country and prices.

“We need to continue building demand in Europe, Latin America, the Middle East, Southeast Asia — all around the globe,” Shipley said.

China imposed tariffs on mostly ag products on July 6 in response to $34 billion in U.S. duties meant to punish the country for unfair trade practices and intellectual property theft. The soybean levy is now 28 percent, plus a 10-percent value-added tax.

The Trump administration announced recently it plans to impose an additional $200 billion worth of duties on Chinese products, which the country is expected to counter. U.S. agriculture could again be a target.

Finding new markets and growing market share in existing ones is crucial to minimize economic losses from Chinese tariffs, Shipley said. Europe is a prime example of the latter, he said.

“We’ll simply tell our story, how we raise soybeans in a sustainable way,” Shipley said. “Plus, we’ll stress the U.S. is a reliable supplier. We don’t have delivery issues like our competitors.”

Golden opportunity

Michael Magdovitz, a London-based oilseeds analyst at Rabobank, recently told Bloomberg it’s likely the U.S. will upend Brazil as the No. 1 supplier of soybeans to the EU if the U.S.-China trade war persists.

Magdovitz said China will buy most of the soybeans from Brazil and other South American nations that would typically be sold to the EU. As a result, premiums for Brazilian beans are up.

Soybeans to be loaded in September at the Brazilian port of Parangua were $1.95 per bushel higher than U.S. beans on the Chicago Board of Trade in late June.

“We believe the EU will import more U.S. beans than Brazilian origin,” Magdovitz said. “The discounted price of U.S. beans compared to Brazilian origin will cause that to happen.”

Brazil has been the main supplier of soybeans to the 28-nation trading bloc the past six years, records show. The EU is projected to be the world’s second largest soybean buyer during the current marketing year, which ends Aug. 31, at more than 514 million bushels. Imports are expected to increase more than 3.6 million bushels next year, according to the U.S. Department of Agriculture.

The government projects the EU will be the largest soybean meal importer at 19.4 million metric tons, which equates to nearly 900 million bushels of soybeans, during the current marketing year. Almost all of it comes from Brazil and Argentina. Meal imports are expected to remain steady.

Even though the EU is considered a mature soy market, ISA consultants say a golden opportunity exists to build U.S. market share that currently stands at a little more than 26 percent for soybeans and 1.6 percent for meal.

“There will be opportunities to build demand,” said David Green, a consultant with GreenOrange International Public Affairs. “For soybean meal too, not just whole beans.”

But, it won’t be easy.

Former Iowa Soybean Assoication presidents Tom Oswald (standing) and Mark Jackson check out soybean meal during a European Union Learning Opportunities Mission in 2015. (Sumbitted photo)

On to Europe

Green and colleague Benno van der Laan recently shared with ISA’s board of directors and staff the political and social challenges that exist in the EU to increase U.S. soy sales to member nations. The experts will accompany ISA officials on the learning mission.

Challenges include:

  • Compromise can often be difficult among EU members with so many nations and priorities, especially related to agriculture.
  • All 28 Eu-member states use genetically modified soybeans in some fashion, but the EU doesn’t embrace or plant biotech crops like the United States.
  • Some EU members accept the associated science and proven safety record of biotech crops and others don’t.
  • The regulatory approval process of biotech events is often cumbersome and slow.
  • Negative views of American farms being “huge” and controlled by corporations still exist.
  • The United Kingdom is set to depart the EU.

Green said rhetoric pertaining to biotechnology has lessened in recent years. Europeans like that most U.S. farmers embrace sustainability and soil conservation, he added.

“Sustainability is a big deal in Europe and the U.S. Soybean Sustainability Assurance Protocol helps a great deal to assure the sustainable production of U.S. soy, Green said.

“We have seen over the years, when U.S. farmers come over and talk about their farms and family, that provides a better understanding (of soybean production),” he continued. “It’s a way of demystifying American agriculture.”

Europe represents 11 percent of U.S. soybean and soybean meal exports at 6.5 million metric tons or 238 million bushels, according to the U.S. Soybean Export Council.

Contact Matthew Wilde at mwilde@iasoybeans.com.

For media inquiries, please contact Katie Johnson, ISA Public Relations Manager at kjohnson@iasoybeans.com or Aaron Putze, ISA Communications Director at aputze@iasoybeans.com

For permission to republish articles or to request high-res photos contact Aaron Putze at aputze@iasoybeans.com. Iowa Soybean Association | 1255 SW Prairie Trail Pkwy | Ankeny | IA | 50023 | US

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