Soybean Commodity Organizations React to Threatened Tariffs-Implications for Egg and Broiler Producers

The American Soybean Association, the U.S. Soybean Export Council and the United Soybean Board express concern over pricing of soybeans which relies heavily on exports. According to the June USDA-WASDE it was projected that 48 percent of the 2018 total U.S. supply of soybeans (4,810 million bushels) will be exported, amounting to 2,290 million bushels. China represented 44% of U.S. exports in 2017 attaining 1,000 million bushels. This quantity supplied 28 percent of soybean imports into China valued at $14 billion. In comparison Brazil supplied 51 percent of imports into China. Brazil would have a competitive advantage since U.S. product would carry a 25 percent punitive duty unless the escalation in threats to impose mutually destructive tariffs are not resolved by short-term negotiation. Given the close coupling between the price of soybeans and soybean meal, livestock producers in the U.S. will benefit from the disequilibrium between production and export demand. At the beginning of March soybean meal on the CME was quoted at $403 per short ton. Price rose to $424 per short ton at the beginning of May but has since fallen to $333 per short ton for July delivery as of June 25th. Each $10 per ton change in price of soybean meal represents 0.4 cents per dozen eggs or 0.25 cent per live weight lb. On the basis of a $10 per short ton reduction in price of soybean meal, U.S. broiler producers would collectively benefit by $4 million per day assuming 165 million birds per week at 6.1 lbs. live weight and egg producers would attain a windfall of $80,000 per day assuming 305 million hens in production.