Meat exports support soybean prices08/01/2019 | Policy, Livestock, Soybean News, Economics
By Bethany Baratta, ISA senior writer
One could say that pigs and soybeans have a reciprocal relationship; when demand for pork raises, so, too, does demand for soybeans.
Soybean meal is a key ingredient in pig feed, which grows pigs to an ideal market weight to be sold domestically or internationally. Consumers feast on pork, which in turn drives demand for pork, and, therefore, soybeans. That’s why meat exports matter to soybean farmers.
“It’s important that meat exports do well because exports create demand for that product. When it raises more demand, that means they’ll raise more livestock and they’ll need soybean meal to do that,” said Iowa Soybean Association (ISA) District Director Bill Shipley.
A recent study from World Perspectives, Inc., quantifies just how valuable the relationship is between red meat exports and the grain industries.
In 2018, 14.5 percent of the beef produced in the United States was exported; 25.7 percent of U.S. pork was exported, according to the study. Those red meat exports accounted for 2 million tons of soybean meal, equivalent to 84.2 million bushels of soybeans at a market value of $783 million.
Beef and pork exports in 2018 accounted for 459.7 million bushels of corn utilization and 2 million tons of dried distillers grains with solubles (DDGS) use, the report said.
Expanding the report
The U.S. Meat Export Federation (USMEF), with support for the National Corn Growers Association, first commissioned the report in October 2016 to quantify the impact of U.S. beef and pork exports on domestic corn use and value.
However, USMEF said that given the robust and record-setting growth in red meat exports since then, it engaged with World Perspectives, Inc. to update the original study. The updated report was expanded to include the U.S. Department of Agriculture’s (USDA’s) 2019 to 2028 baseline projection data.
Value to Iowa
Pork exports added 85 cents to the average $9.30 per bushel soybean price in 2018, the report said. Beef and pork exports added $0.39 to the average 2018 corn price of $3.53 per bushel.
Without pork exports, Iowa soybean farmers would have lost $485 million in revenue in 2018, the report said.
Indirect exports of soybeans — like those sold through pork exports — is projected to be the fastest-growing category of exports at a rate of 12 percent between 2019 and 2028, according to USDA projections More than one-third of the growth in exports of soybeans will come from pork exports, the report said.
Pork exports over the 2019-2028 period are projected to use the soybean bushel equivalent of $8.68 billion in market value, the report showed.
The forecast market value of pork exports to Iowa soybean growers between 2019 and 2028 is expected to reach $965 million, the report said.
The market value of corn and DDGS from 2019 and 2028 is forecast at $4.2 billion for the state, the report said.
It shows the expanded opportunities for Iowa’s soybean farmers—many of which are also corn farmers, Shipley said.
“We’re part of the food chain,” Shipley said. “We supply the soybean meal and the corn; there aren’t many soybean farmers who aren’t corn farmers, too, so sales of corn and DDGS are also important to us.”
Highlights trade opportunities
Maintaining market access in export markets is essential to the Iowa soybean industry, the study showed. Japan, for example, is the most important market for U.S. red meat exports, ranking first in value for both beef and pork. The Japanese market also ranks first in volume for beef and second in volume for pork.
Japan’s membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and existing Japan-EU Economic Partnership means the United States is at a tariff disadvantage to products from other exporting nations. The current tariff disadvantage is between 7.1 and 11.9 percentage points for beef, and between 3.4 and 6.7 percentage points for pork. The study says that inequity will grow as the Agreement and Partnership continue to phase down tariffs on beef and pork from other exporting countries.
That’s why a free trade agreement between the United States and Japan is important, the USMEF said. Without it, the United States faces a significant loss in market share among beef and pork imports into Japan over the next 10 years.
As the study shows, exports are important for the soybean industry, and all of agriculture.
Scott McGregor, federation director for the Iowa Beef Industry Council and former ISA district director, grows soybeans and corn and raises cow-calf pairs and feedlot cattle . He understands how valuable exports are to the products he and his family raise and grow near Nashua.
“It’s important to access all markets that are available to us beyond our domestic market,” McGregor said. “The majority of consumers are outside of the United States, and we must be able to reach them to sell our products.”
Shipley said a trade agreement with Japan, the passage of the U.S.-Mexico-Canada Agreement (USMCA) and a resolution to the trade dispute with China could also help build soybean demand. Meanwhile, he said ISA continues to explore any and all markets to sell more soybeans.
“We don’t want to forget about our existing markets, we can always build on those,” Shipley said. “But we’re always looking for new markets, too.”
Contact Bethany Baratta at email@example.com.
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