By the end of 2020, supplies of Russian soybeans to foreign markets may grow by more than 70% compared to last year’s export volumes and exceed 1.5 million tons, forecasts the Center for Industry Expertise of Russian Agricultural Bank (RusAg, the Bank).
“The export of soybeans is mainly supported by the growing demand from China and Belarus, which remain the main consumers of this oilseed crop for Russia. In total, these countries account for more than 70% of all foreign supplies of Russian soybeans,” says Andrey Dalnov, Head of the Center for Industry Expertise at RusAg.
According to the Center for Industry Expertise, the Chinese market accounts for over 50% of all Russian soybean exports. As the pig population recovers, China continues to actively buy soybeans: in the coming marketing season, which began in September 2020, soybean imports may increase by another 3% by the 2019/2020 season and reach a record level of 100 million tons.
“The share of Russia in the total volume of Chinese imports is still small, within 1%. Nevertheless, the factor of the growing demand for soybeans from China will affect the dynamics of prices in the world market and in Russia,” adds Andrey Dalnov.
According to the World Bank, the world price for soybeans this year will rise by 5% to USD 390 per tonne and will strengthen by another 3% to USD 400 per tonne next year. As a result, already this year, the average price on the Russian market for this crop may reach RUB 30 thousand per ton, and in 2021 it will increase by another 5-10%.
The growth in supplies of Russian soybeans to Belarus, which is the second largest importer of this crop from Russia, is explained by the increase in oilseed processing capacities in the republic. Part of the processed products is then returned to the Russian market in the form of soybean meal and is used later in the production of compound feed for domestic livestock breeders.
However, in the future, domestic companies may compete with Belarusian processors, the Center for Industry Expertise at RusAg notes. To date, a number of investment projects have already been announced in the Central Federal District to expand existing and create new soybean processing facilities with a total increase of 2.5 million tons to 3.8 million tons per year.
“The need for new projects in raw materials may lead to a redistribution of a part of export volumes in favor of Russian processors and stimulate further growth in the production of soybeans in the European part of Russia,” predicts Dalnov.
Generally, by the end of 2020, the production of soybeans in Russia is projected at 4.2 million tons. Compared to the record level of the previous year, production will slightly decrease (by 4-5%), which is associated with a reduction in sown areas. The soybean acreage is concentrated in the regions of the Far Eastern and Central Federal Districts. The absolute leader is the Amur Region (30%). Approximately 9% each falls on the Primorsky Territory, Belgorod and Kursk regions. A noticeable share of crops (5-6%) falls on the Voronezh and Tambov regions, Krasnodar Territory and Altai Territory. The regions of the Far Eastern Federal District and the Siberian Federal District traditionally specialize in the supply of soybeans to China. Regions of the European part of Russia supply soybeans to Belarus, the countries of the Middle East and Kazakhstan.