Trade
World oilseed trade consists of many closely substitutable
commodities, such as soybeans, rapeseed, sunflowerseed, and
cottonseed. Countries also trade oils and meals obtained from
crushing oilseeds. Foreign import demand depends on the difference
between countries' domestic oilseed output and consumption.
Divergent demand for protein meal and vegetable oil, as well as
limits on domestic processing capacity, determine the ratio of
oilseeds to oilseed products that countries import. The volume and
source of foreign imports depends on seasonal availability and
relative prices, credit and delivery terms, local preferences, and
quality. Country policies, such as tariffs and domestic
subsidies, also can affect prices and the availability of
competing products. USDA's Foreign Agricultural Service (FAS)
monthly report Oilseeds: World Markets and Trade presents
forecasts and historical data by country for the major oilseeds and
their products, covering production, domestic consumption, and
international trade.
U.S. Exports and Imports
The United States is the world's largest producer and exporter
of soybeans. Oilseed and oilseed product exports, particularly
soybeans, represent a significant source of demand for U.S.
producers and make a large net contribution to the U.S.
agricultural trade balance. Among all U.S. agricultural products,
only grains and feeds outrank the oilseed sector in total export
value and volume. In the early 2000s, the value of U.S. oilseed and
product exports averaged over $9 billion, nearly half the
farm-level value of production. By the late 2000s, the value of
oilseed and product exports doubled to over $20 billion.
Outlook for U.S. Agricultural Trade provides
the latest information on U.S. farm exports, by commodity and
region, as well as the trade outlook. Current U.S. export sales of soybeans, soybean meal,
and soybean oil are tracked by destination on a weekly basis.
Main export destinations for U.S. oilseeds, oilseed meal, and
vegetable oil include China, the European Union (EU), Japan,
Mexico, and Taiwan. Other important markets--including Indonesia,
South Korea, and Thailand. Canada, Mexico, the Philippines, and
several Latin American countries--also import significant
quantities of U.S. oilseed meals. U.S. vegetable oil exports are
more dispersed and are heavily influenced by concessional food aid
to developing nations through such programs as P.L. 480.
U.S. imports of oilseeds and oilseed products were worth $3-$4
billion in the late 2000s, and are mainly rapeseed and rapeseed
products (e.g., canola oil) from Canada, olive oil from Western
Europe, and tropical oils from the Philippines, Indonesia, and
Malaysia. FAS' Global Agricultural Trade System (GATS) can be
used to search for statistics on U.S. exports and imports of
oilseeds and oilseed products by country or region.
Despite substantial growth in oilseed and oilseed product output
in the past 25 years and recent gains in export volume, the U.S.
share of global exports has steadily diminished. In the mid- to
late 1970s, the United States dominated world trade in unprocessed
oilseeds, with a global market share of more than 70 percent.
Recently, this figure has fallen below 50 percent. From a smaller
percentage base, the United States has seen its share of oilseed
meal and vegetable oil exports decline even more sharply,
particularly before 1990.
While soybean exports from the United States have grown over the
past 25 years, the share of U.S. exports in global oilseeds trade
has declined. A key development has been the phenomenal growth of
foreign soybean output and exports, particularly by Brazil and
Argentina. Foreign soybean output now exceeds that of the United
States, and Brazil and Argentina currently share more than half of
the soybean export market, up from less than 15 percent before
1980. With increased soybean production and rapid growth in
crushing capacity, Brazil and Argentina have each surpassed the
United States in soy meal and soy oil exports. Another factor is
the recent expansion of U.S. meat exports, which stimulates
domestic meal use, rather than exports of soybeans or soybean meal.
Brazilian and Argentine soybean and meal exports are projected to
continue capturing market share from the United States in the next
decade.
Major Foreign Soybean
Exporters and Importers
Since the early 1970s, soybean production in South America has
expanded rapidly. Brazil now trails only the United States in
soybean production. Brazilian soybean growing regions 
used to be concentrated in the south,
relatively near the major ports. In recent years, soybeans have
expanded into the vast farmland of the center-west states, as
infrastructure improvements have cut internal transportation costs.
Brazil's vast reserves of farmland could permit a continued
significant expansion in soybean area, though expansion is
currently limited because of insufficient transportation
infrastructure. Argentina's soybean growing regions and crushers are located close to port
facilities, where the country's highly developed crushing industry
and relatively small domestic market makes it the world's largest
exporter of soybean meal and oil. A lower export tax on processed
commodities than on unprocessed commodities also favors the export
of soybean oil and meal from Argentina. Recent increases in
production by Argentine and Brazilian grain and oilseed producers
could foreshadow continued gains on the strength of abundant
undeveloped agricultural resources, more stable economies, and
expanding trade liberalization (see
Agriculture in Brazil and Argentina: Developments and Prospects for
Major Field Crops).
China is the world's fourth-largest producer of soybeans. The
major Chinese soybean growing regions are in the
northeast part of China. Yet, rapid growth of China's economy has
spurred food consumption, turning the country into the world's
leading soybean importer. Changes in China's agricultural and trade
policies have greatly influenced world oilseed markets (see
China's New Farm Subsidies). China's WTO accession has reduced import tariffs
and quantitative restrictions to its oilseed market.
The major Indian soybean growing region is in the
central state of Madhya Pradesh. Indian production of soybeans and
other traditionally grown oilseeds--such as peanuts, rapeseed, and
cottonseed--has increased in the last decade, although yields are
among the world's poorest. India often imposes prohibitive barriers
on oilseed imports, so its domestic crushing industry relies on
domestic oilseed supplies. Domestically produced oilseeds are
highly valued sources of vegetable oil, but domestic consumption
has risen faster than domestic production, so that India now ranks
among the world's largest vegetable oil importers (see India's Edible Oil Sector: Imports Fill Rising
Demand). India is a smaller (but growing) consumer of soybean
meal, and exports its surplus to other Asian countries.
The European Union is self-sufficient in vegetable oil
production, but its protein deficit still makes it the world's
largest importer of soybean meal and second-largest importer of
soybeans. Since the 1960s, EU imports of soybeans swelled because
of rapid growth in livestock production and duty-free concessions
signed in trade agreements. In the 1970s and 1980s, soybean
consumption slowed as EU agricultural policies subsidized a large
expansion in domestically produced rapeseed and sunflowerseed,
eroding the market for oilseed imports. The U.S. Government
challenged these subsidies and, in 1992, the EU committed to a
number of reforms of its Common Agricultural Policy (CAP),
including area limits on the planting of oilseeds.
Further CAP reforms reduced per-hectare direct payments to
oilseed producers to those received by grains producers. Until
2005, reforms encouraged EU farmers to scale back oilseeds
planting. However, recent EU biodiesel policies have encouraged EU
farmers to dramatically increase oilseeds area, especially
rapeseed.
In coming years, EU enlargement and CAP reform are projected to
swell internal grain supplies and allow EU grain prices to fall
even more. Despite relatively low protein-meal prices, the
comparatively larger reduction in the cost of feeding grains to
livestock should curb EU soybean meal consumption and imports.
Historically, high import tariffs on cereals have boosted EU
consumption of soybean meal, which has been favored by duty-free
access for soybeans. Over the last decade, lower grain prices and
several animal disease epidemics resulted in significant increases
in the feeding of grains and oilseed meals and a reduction in the
feeding of nongrain feed ingredients, such as meat and bone meal
(see Livestock Feeding and Feed Imports in the European
Union-A Decade of Change).
Under the North American Free Trade Agreement (
NAFTA), Mexico phased out its tariff on soybeans and canola by
2003. With reforms in Mexico's domestic crop support programs,
imports have virtually displaced domestic soybean production, with
nearly all imports coming from the United States. U.S. soybean
exports to Mexico have more than doubled since 1993. Strong income
growth among Mexican consumers has boosted consumption of meat and
vegetable oils and increased demand for soybeans. Improvements in
Mexico's rail links at the border have also expedited trade in
oilseeds. Imports by Mexico are primarily seed, which are crushed
domestically.
Trade Policies
Compared with trade in other agricultural commodities, trade in
whole oilseeds, particularly soybeans, is relatively unrestricted
by tariffs and other border measures. But oilseed meals, and
particularly vegetable oils, typically have higher tariffs. Agricultural tariff schedules for World Trade
Organization (WTO) member countries report the current maximum
permissible duties.
In addition to tariffs, both exporters and importers have used
other trade--distorting policies, such as differential export taxes
in Argentina and in Brazil (prior to 1996), production subsidies in
the EU, and phytosanitary barriers in India. These policies create
incentives to boost domestic oilseed production or encourage
exports of processed products, which tend to displace U.S. oilseed
exports and shift the composition of U.S. exports toward whole
oilseeds and away from higher value-added oilseed meals and
vegetable oils.
The Doha round of WTO negotiations began in 2001 and is still
ongoing. Among other issues, negotiations focus on matters
previously addressed by the Uruguay Round Agreement on Agriculture
(URAA), such as limits on tariff and nontariff barriers to trade,
export subsidies, and the type and level of spending by countries
on domestic agricultural support programs. These provisions limit
member countries' use of trade-distorting policies. U.S. objectives
for
future negotiations include further reducing tariffs and
improving market access, eliminating the use of export subsidies,
and further limiting trade-distorting domestic programs. Analyses
of U.S. Tariff-Rate Quotas for Peanuts have also
shown their significant influence on U.S. peanut imports,
particularly prior to the elimination of the peanut-marketing quota
system in 2002 (see Peanut Policy Change and Adjustment Under the 2002
Farm Act).