The Economic Position of the United States and Louisiana in the World Market for Soybeans and the Future Outlook.

This study was designed to analyze the supply-demand relationships and institutional arrangements in the world market for soybeans, and to estimate the market potential for United States and Louisiana soybeans for 1985. Subsidies, tariffs and other devices imposed by soybean importing and exporting countries were compared. Prices and regulatory policies were evaluated as to their impact upon land use and soybean production. Trends in soybean production, imports and exports were developed for three time periods and compared on a world-wide basis, by geographic regions, and for major countries involved in soybean trade. The impact of substitutes upon United States exports of soybeans and soybean products was evaluated by means of multiple regression analysis. For each of the export categories (United States exports of soybeans, soybean meal and soybean oil) two equations were developed. One related the exports to world prices of competitive commodities and the other to volumes of imports of other oilseed commodities by main soybean importing nations. Development of a model for predicting future market potential for United States and Louisiana soybeans entailed the postulation of a theoretical supply-demand frame-work which involved three equations representing the production sector, the domestic sector, and the export demand sector. United States soybean exports included both the bean exports and the bean equivalent of soybean meal exports. A foreign exchange variable was included in the export demand equation. Coefficient values reported in the study were estimated from time series data for the period 1961-1977. Soybeans and soybean products are traded under relatively free market conditions, with import restrictions and export incentives directed primarily to soybean oil. During 1961-1977 the United States and Brazil exploited the comparative advantage that the two countries have in the production of soybeans. These two countries are endowed with vast amounts of land suitable for the production of the crop and producers in both countries have responded favorably to incentive programs implemented by the respective governments. In the United States, acreage controls and marketing quotas on feed grains have shifted land out of those crops and primarily into soybeans. Additional new lands have been cleared and brought into soybean production. The latter has been specially important in Brazil. The trend analysis indicates that the United States and Brazil, as exporters, and the Economic Community and Japan, as importers, will continue to play a dominant role in the world soybean market. Competition from other oilseeds and oilseed products does not appear to be strong enough to threaten the export demand for United States soybeans. Major competition was shown by groundnuts, palmkernels, and sunflowerseed. The predictive model indicates that the outlook for United States exports of soybeans is good for the years ahead. Soybean producers in the United States would likely benefit from this promising export market. The export demand for soybeans in 1985 is predicted to be 1,105 million bushels which is equivalent to 53 percent of United States predicted production of 2,078 million bushels for the same year. Given the explicit assumptions associated with the model from which the 1985 predictions were derived and assuming that competition from competing oilseeds, shifts in tastes, preferences, and feeding technologies would not drastically change, the model implies an annual increase of 33.5 million bushels in total soybean demand (14.9 millions in domestic demand and 18.6 millions in export demand). The larger annual increase in export demand is likely to benefit Louisiana since about 90 percent of the soybean production from the state is exported. The foreign exchange variable was found to be very important in explaining variations in the level of export demand for soybeans