Expert: Soybean demand to remain high

Growing soybean demand in China and Southeast Asia means a seller’s market – and the accompanying supply crunch – will likely persist into the near future, a U.S. Department of Agriculture analyst said Tuesday at the Northern Soybean Expo in Fargo.

A number of market factors are expected to strain soybean supply in the coming years, said Bill George, an oilseeds specialist for the Foreign Agriculture Service. Demand is expected to continue to grow faster than supply, driven primarily by China but also by Vietnam, Indonesia, and Middle Eastern and North African nations.

Anticipated prices for corn and cotton mean those crops are getting acreage at the expense of soybeans. And growers in Brazil – the No. 2 soybean exporter in the world behind the United States – aren’t earning enough to justify expanding production because the country’s currency is strong against to the dollar, George said.

All of that translates to a market where “people are lined up to buy your beans,” George said. But it also means stockpiles are running low and prices are subject to more volatility than they would be if supplies were more stable.

While the U.S. Department of Agriculture will not release its official production estimates for 2011 until next week, early season sales figures are running far ahead of last year; in fact, this year’s early sales eclipsed last year’s by five-fold.

George’s remarks were followed by a presentation from soybean grower Brent Kohls who shared highlights from a North Dakota Soybean Council-sponsored trip to Indonesia and Vietnam in January. Kohls said the trip was valuable for building and maintaining relationships with potential customers.

Kohls said buyers in those countries prefer U.S. soybeans for their quality and consistency, and are even willing to pay a premium to a point.

Tuesday’s expo also included trade show exhibits, remarks on biodiesel, and an assessment of the economic impact of the state’s soybean industry.

(Source: http://www.inforum.com/event/article/id/308847/group/Business/)