The Dark Side Of Success For U.S. Soybean Exports

In 2017, U.S. soybean producers sent an estimated 1.32 billion bushels of their crop to China, the second-most on record. The record for U.S-to-China soybean exports came a year earlier, when U.S. soybean producers exported an estimated 1.53 billion bushels of their crop that year to China, which was a dramatic increase over the 1.15 billion bushels they sent to China in the year before.

2016 would appear to be have been the most successful year to date for U.S. soybean exporters, but there’s a lot more to that story.

Although the year saw optimal growing conditions for soybeans in the U.S., which resulted in a bumper crop, one of the main contributors to the success of U.S. soybean producers that year came about as a result of a severe drought in Brazil, the world’s top soybean exporting nation.

Brazil’s drought created a unique opportunity for U.S. soybean producers seeking to claim a larger share of the world market in 2016. Since Brazil’s annual harvest peaks in the second quarter of each year, thanks to its Southern hemisphere geography that puts its growing seasons six months ahead of the U.S., the news that Brazil’s 2016 soybean crop and exports would be reduced because of drought conditions provided U.S. growers with the advance warning they would need to respond to what, for them, would be an opportunity.

So they took it. U.S. soybean producers planted seed varieties that would optimize the yield for their crops, which helped contribute to 2016’s bumper crop in the United States. They then aggressively harvested the crop to satisfy China’s domestic demand for soybeans, where China was buying up as many bushels of soybeans from the U.S. as they could that year.

But there was a dark side to that success, which is now becoming increasing apparent. In choosing seeds that would maximize crop yields, U.S. soybean producers sacrificed the protein content of their crop, effectively reducing the quality of their product. In 2017, that meant having to compete with higher quality soybeans grown in Brazil as that nation’s crops have rebounded from 2016’s drought conditions.