Strong growth throughout the recession will be dampened by future competition
New York, NY (PRWEB) March 14, 2014
US soybean farmers were generally immune to the negative effects of the recession. Unlike most other industries that experienced steep declines in revenue, domestic and international demand for the Soybean Farming industry went through periods of booms and busts over the five years to 2014. The depreciating dollar, coupled with rising demand for food from developing countries, has boosted exports, while the rapid expansion of biofuel production in the United States has spurred soybean farming revenue growth in four of the past five years. At the same time, soybean prices fell dramatically in 2013 after reaching record highs during the 2012 drought. As a result, IBISWorld expects revenue to grow at a modest annualized rate of 1.7% in the five years to 2014.
According to IBISWorld Industry Analyst Will McKitterick, “Despite strong growth, the adoption of genetically modified seeds is reaching a saturation point and is no longer a major source of yield improvement.” Additionally, the biofuels segment, which rejuvenated the industry and strengthened domestic demand, is stabilizing. Consequently, growth rates are forecast to weaken slightly in the next five years. A surge in South American inventory is responsible for the United States' declining share of global exports. The 2012 drought has also reduced the supply of soybeans, with US export volumes falling during the year. This situation presents a threat to the industry as Argentina and Brazil increase their global presence in the soybean export market. Furthermore, an abundance of wheat production sent soybean prices down from their historic highs during the previous year. As a result of these factors, revenue is forecast to fall 8.7% in 2014 to $38.3 billion.
During the next five years, soybeans are anticipated to maintain their position as the second-largest crop in the United States, behind corn. Still, “the Soybean Farming industry is heavily exposed to volatility from external factors, such as weather conditions, market prices and government subsidies,” says McKitterick. Consequently, profit margins may vary greatly from year to year. However, while the United States Department of Agriculture expects soybean production to increase over the next five years, prices will begin their fall from historic highs and continue to decline through most of the period. As a result, industry revenue is forecast to increase over the five years to 2019.
For more information, visit IBISWorld’s Soybean Farming in the US industry report page.
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IBISWorld industry Report Key Topics
Farms in the Soybean Farming industry grow soybeans as their main crop. Soybeans are most often used in livestock feeds and vegetable oils, with a small but growing proportion being used in biofuel production. Establishments that sell soybean seeds to US farmers for growing crops are also included.
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