Minnesota Farmers Union

(January 1, 2010) - Beginning in the fall of 2006, soybean prices have seen a marked improvement from the sub-$5.00 levels that farmers had to contend with in the 1998-2001 period. Currently soybeans are in the $9.00/bushel range, below the $15.00-plus-peak in mid-2008, but still at comfortable levels for producers in the US and around the world.

As we look to the coming year, let's remind ourselves how we arrived at this point. The changes in soybean prices over the last decade can be attributed to a number of factors, prime of which is the appearance of China as a major soybean importer.

Since 1999, the imports of soybeans by China has quadrupled to the point where it accounts for 53 percent of the world imports of soybeans. Soybean exports to the rest of the world have remained relatively flat since 1999. Without China's steadily increasing imports of soybeans, soybean producers in the US, Brazil, and Argentina would be facing serious problems.

Brazil and Argentina have captured 70 percent of the increase in total world soybean exports since 1999.

A second factor affecting the soybean price is the rapid development of the corn based ethanol industry in the US. The sharp increase in the demand for corn caused US farmers to replace significant soybean acres with corn acres reducing soybean production and increasing prices.