Seeing Soy Optimism in Europe

Iowa Leaders Discuss Take on Visiting EU Countries as US Soybean Sales to Europe Rise

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A clean field of soybeans near Boody, Illinois. As the growing season continues, trade remains the hot topic for soybeans. This week, members of the Iowa Soybean Association have been in Europe talking about the prospects for more sales. (DTN file photo by Pam Smith)

OMAHA (DTN) -- Leaders from the Iowa Soybean Association touring Europe this week see optimism for greater U.S. sales growth in the region. At the same time, European officials are already touting just how much U.S. soybean sales to Europe already have increased this year.

Iowa Soybean Association leaders held a press call with reporters on Wednesday to talk about their trip.

The EU Commission also released a statement Wednesday on the growth of soybean imports from the U.S., making it clear they had been boosting imports before EU Commission President Jean Claude Juncker met with President Donald Trump in late July. Economically, it makes sense for EU buyers to turn more to the U.S. right now.

Based on the talks between Trump and Juncker, the EU will start bimonthly reporting on EU imports of soybeans from the U.S. and the market share the U.S. holds.

To see the full European Commission news release, visit: https://goo.gl/…

The boost in soybean sales to Europe comes as Chinese buyers have backed off purchasing U.S. soybeans because of a 25% retaliatory tariff. China thus far, has been able to buy more from Brazil, which has opened the door for U.S. to increase sales elsewhere while the tariff battle continues between the U.S. and China.

Iowa Soybean Association representatives indicated there were no specific commitments among the groups they met and the countries they visited, but grain groups and others in places such as Hungary, Ireland and Denmark did say they would like to bring in more U.S. soy products.

"We never heard any specifics, but they did talk about wanting to increase imports form the United States," said Dave Shipley, president of the Iowa Soybean Association.

The trip, set up several months ago, was meant to focus on regulatory regimes and farmer practices in different countries. After visiting Hungary, an ISA staffer said there were a few inquiries to make more purchases in that country. So the U.S. Soybean Export Council will be following up with prospective buyers.

President Trump has rubbed some people the wrong way in Europe and elsewhere with his negotiating style. Still, ISA leaders said politics hasn't dominated their trip.

"Our president has been brought up a small amount, but not very much, which has kind of surprised me," Shipley said. "There's a few comments made, and we all expected that. We expected a lot worse, if you want to know the truth, but it has went pretty well."

Shipley said conversation has focused more on what it will take to sell more soybeans in Europe. Following a report by Rabobank indicating the U.S. could one day be the largest soybean supplier to Europe, Shipley said he wanted to be optimistic that could happen.

"We've been well received, and I think the possibility is there we could be their No. 1 supplier," Shipley said. "There are some issues I think we have to deal with to get to that point, but I think we will be their No. 1 supplier."

Feed industry growth in Europe is increasing about 3% a year, and the European Union is the second-largest buyer of soybeans in the world behind China. Europe, though, traditionally has relied more heavily on South America than the U.S. The drought in Argentina and U.S.-China trade war has shifted more Brazilian soybeans to China, so the EU has turned more to the U.S., especially in recent months.

EU buyers are turning more to the U.S. right now because U.S. beans are cheaper and more available than Brazil's. Since Sept. 1, 2017 -- the start of the U.S. soybean market year -- EU has bought 164.9 million bushels (mb) of U.S. soybeans, up 8.3% from the same time period during the 2016-17 marketing year, according to USDA sales data through July 19. The U.S. has a 26% to 30% market in the EU for whole beans.

Dave Walton, an ISA director from east-central Iowa, said trade with the EU has always been open, but they bought elsewhere. "They have sourced South American soybeans in the past," Walton said. "Now it makes more economic sense to bring them in from the United States. I think, in general, we are going to see more trade between the U.S. and the EU."

Stephanie Essick, another ISA director, said now is a good opportunity to build a stronger relationship with the EU. "I think they will purchase more than they have in the past," she said.

According to USDA figures, the EU also has bought 643,700 metric tons (mt) compared to 224,300 mt in 2016-17 market year, nearly a 287% increase in sales. That 643,700 mt equates to about 29.8 mb. Those sales have spiked in recent months as EU officials noted the region imported 185,000 mt of soymeal from the U.S. in July alone. The EU states the United States is now supplying about 13% of the federation's imported soymeal, though U.S. market share is normally closer to about 2% or less.

The trip was set up last winter, "but it just so happens we're here at a very opportune time when things look better for doing business with Europe," said Bill Shipley, president of the Iowa Soybean Association.

Still, ISA representatives noted the EU still poses some regulatory challenges to increasing U.S. soybean imports. One is the slow pace of approval of new biotechnology events. It can take five to seven years for the EU to complete approval of a new biotechnology trait, slowing commercialization not just in the U.S. but other countries as well.

The ruling last week by a European court that gene-editing techniques can be regulated as biotechnology events was another blow to industry and agriculture in Europe. "They had hoped these new techniques would be available to them," said Benno Van der Laan, a consultant with the U.S. Soybean Export Council. "That now seems to be put on ice, at least for a little while, until we see what the European Commission is going to do with this ruling."

Europe's sustainability standards also make it more difficult to use U.S. soybean oil for biodiesel production in Europe.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(SK/BAS)

Chris Clayton