World Soybean Situation 2007

1. World Soybean Situation 2007 << Please left-click your mouse or press the spacebar to start >>

2. What countries are the global leading soybean producers (including soybean meal and soybean oil) and how they use their production Global soybean production • What countries are the world major soybean exporters and to where they export most • What countries are the world major soybean importers and from where they import most Soybean trade pattern • Brief review on global production drivers of soybean and its derivative products such as harvested area and crushing capacity expansion as well as yield improvement, Soybean industry issues Impact on soybean price • What would be the possible impact of global soybean industrial issues on soybean prices

3. The world was producing more than 228 billion metric tons of soybean last 2006. • The global production is expected to reach 280 billion metric tons by the next 10 years thanks to persistent production increase in U.S., Brazil, and Argentina that make up 82% of global production. Global soybean production Soybean trade pattern Soybean industry issues projection Impact on soybean price Source: FAPRI

4. Global soybean production Soybean meal production Soybean oil production projection projection Soybean trade pattern Soybean industry issues Impact on soybean price Source: FAPRI • China, Brazil, and Argentina would play a pivotal role in the expansion of global soybean meal and soy oil production thanks to countries’ soybean crushing capacity expansion initiated by global companies such as ADM & Cargill.

5. Global soybean production Not crushed Soybean trade pattern Domestic Consumption (53 billion MT) Domestic consumption Soybean meal Soybean industry issues Crushed Exports Domestic consumption Oil Impact on soybean price Exports Waste Exports (30 billion MT) • U.S. exported more raw soybean than that of soybean products such as soybean meal and soy oil.

6. Global soybean production Domestic consumption Not crushed Soybean trade pattern Domestic Consumption (36 billion MT) Soybean meal Exports Soybean industry issues Crushed Domestic consumption Impact on soybean price Oil Exports Waste Exports (7 billion MT) • By contrast, the most part of Argentine’s export is in the form of soybean meal and soy oil.

7. Global soybean production Not crushed Soybean trade pattern Domestic consumption Soybean meal Domestic Consumption (30 billion MT) Crushed Exports Soybean industry issues Oil Domestic consumption Exports Waste Impact on soybean price Exports (26 billion MT) • Similar to the U.S., nearly half of raw soybean in Brazil were exported without processing.

8. Soybean Soybean meal Global soybean production Soybean trade pattern Soybean industry issues Impact on soybean price Soybean oil • U.S. is currently the largest global supplier of raw soybean. • Argentina’s soybean meal and soy oil export are dominant in global market. • Brazil is the second largest supplier of raw soybean and soybean products. Source: USDA

9. Soybean Soybean meal Global soybean production Soybean trade pattern Soybean industry issues Impact on soybean price Soybean oil • China has become the ultimate raw soybean buyer of U.S, Brazil, and Argentina. • A large part of soybean meal produced by Brazil & Argentina are exported to Europe. • China & India are the major soybean oil foreign market for Brazil & Argentina. Source: UN Comtrade

10. Global soybean production projection Soybean trade pattern Soybean industry issues Impact on soybean price Source: USDA • Brazil is expected to be the largest soybean exporter in the next decade with amount of 62 million MT next 2016/17 and export to grow at 8.5%/year on average.

11. Soybean derivative product export projection Global soybean production Soybean trade pattern Soybean industry issues Impact on soybean price Source: USDA • Brazil, in combine with Argentina, is also expected to be the leading global supplier of soybean products i.e. soybean meal and soybean oil.

12. Soybean Soybean meal Global soybean production Soybean trade pattern Soybean industry issues Impact on soybean price Soybean oil • The increasing soybean crushing capacity has changed China’s import pattern from importing more soybean meal to importing a large amount of raw soybean. • EU has become the largest soybean meal importer due to faster-than-production-growth of consumption. Source: USDA

13. Soybean Soybean meal Global soybean production Soybean trade pattern Soybean industry issues Impact on soybean price Soybean oil • Major soybean importing countries are mainly supplied by major soybean exporting countries such as U.S., Brazil, and Argentina. • China, India, and EU are heavily rely on major producers of soybean meal and soy oil in Latin America. Source: UN Comtrade

14. Global soybean production projection Soybean trade pattern Soybean industry issues Impact on soybean price Source: USDA • China is expected to maintain its position as the largest soybean importer on the back of growing meat consumption thanks to country’s healthy economic growth.

15. Global soybean production Soybean derivative product imports projection Soybean trade pattern Soybean industry issues Impact on soybean price Source: USDA • The persistent imbalance between production and consumption growth would create a need for greater EU’s reliance in imported soybean meal.

16. World ending stock for soybean is quite abundant, have increasing trend, and no foreseeable pressure for soy price increase is expected. Global soybean production Soybean trade pattern projection Soybean industry issues Impact on soybean price Source: FAPRI

17. Yield improvement and harvested area expansion in major soybean producing countries are key to stable global soybean ending stock. Global soybean production Soybean trade pattern Brazil Factor • Harvested area Increased by 86% from 11.8 million ha (1996/7) to 22 million ha (2005/6). • Yield improvement from 2.43 t/ha in 1998 to 2.67 t/ha in 2006 Soybean industry issues STABLE SOYBEAN ENDING STOCK Argentina Factor Impact on soybean price • Harvested area Increased by 145% from 6.2 million ha (1996/7) to 15.2 million ha (2005/6). • Yield improvement from 2.45 t/ha in 1998 to 2.78 t/ha in 2006 U.S. Factor • Stagnant harvested area • Yield improvement from 2.62 t/ha in 1998 to 2.87 t/ha in 2006

18. Global soybean production projection Soybean trade pattern Soybean industry issues Impact on soybean price Source: FAPRI

19. U.S. yield still a bit above those of Argentina and Brazil, with 2.87 ton of soybean produced per hectare in 2006. • Argentina’s yield is growing fastest due to its monoculture system that require large area (1,000-2,000 hectares). Global soybean production Soybean trade pattern Soybean industry issues Impact on soybean price Source: calculated from USDA publication

20. Global soybean production • The expected unchanged use pattern of soybean is also a major factor that stabilize global soybean ending stock Corn use Soybean use Soybean trade pattern projection projection Soybean industry issues Impact on soybean price Source: FAPRI • Corn use for feed and food are currently in competition with ethanol. This has resulted in tight ending stock. • The case does not apply for soybean as there are no significant alternative use of soybean (like corn for ethanol) resulting in stable ending stock.

21. Global soybean production Soybean meal ending stock Soybean oil ending stock Soybean trade pattern projection projection Soybean industry issues Impact on soybean price Source: FAPRI • Both soybean meal and oil projections are showing relatively stable ending stock. • Major soybean oil and meal producer are expected to maintain their productivity level for the next 10 years.

22. The stable ending stock of soybean products such as SBM and soy oil can be attributed to the expansion crushing plant in Latin America and China that compensated the decreasing capacity in the U.S Global soybean production Soybean trade pattern • U.S Crushing Situation • Closures of MNC-owned crushing plants (±16,000 mt/day) due to low crushing margin. • Those plants have been gradually relocated to Latin America & China. • The construction of ±12,000 mt/day of new crushing plant owned by the U.S farmer organizations Soybean industry issues Decreasing Impact on soybean price • Latin America Crushing Situation • Bunge, Cargill, ADM, and Coinbra of Louis Dreyfus have all significantly expanded their crushing capacities through acquisitions and plant expansions in Brazil, Argentina, and other parts of Latin America Increasing • China Crushing Situation • China’s soybean crushing industry has witnessed the growing large investment in new crushing plants conducted by MNC such as ADM & cargill as well as local Chinese firms. Increasing

23. Global soybean production projection Soybean trade pattern Soybean industry issues Impact on soybean price Source: World Bank (2004) • Owing to the relatively unchanged soybean use pattern and abundant ending stock, price pressure for soybean is less likely to materialize in the near future. • This hypothesis is also supported by World Bank’s projection as can be seen at chart above.

24. For queries please contact: Ibnu Edy Wiyono & M Ryan Sanjaya Economic & Business Research Vice Chairman Office – Charoen Pokphand Indonesia Email : ibnu.wiyono@cp.co.id; muhammad.sanjaya@cp.co.id Phone : 62-21-6919999, Ext. 504/576 Fax : 62-21-6922274