World Soybean Demand: An Elasticity Analysis and Long-Term Projections

Soybeans are one of the most valuable crops in the world and are characterized by their multi-purpose uses: food, feed, fuel and other industrial usages such as paint, inks, and plastics. Out of 183.9 million tons of world supply/demand of soybeans in 2001-03 year, about 10% of them were directly consumed as food (5.9%) or feed (3.8%) but 84.2% of them were crushed into soyoil and soymeal. Soyoil is mainly processed to vegetable oil for human consumption and recently used as a biodiesel feedstock. Soymeal is used not only as feed for livestock (especially for pork and poultry due to its low fiber level) and aquaculture, but also as a good source of protein for the human diet in a variety of forms in different cultures. This paper analyzes the relationship of the demand for soybeans with economy at country and international levels. We use the county level domestic demand quantities with GDP data and apply an error correction mechanism (ECM) to estimate the long-term elasticities of demand for soybeans in the market/economy. Using the estimated long-term elasticities, the demands for soybeans are projected through 2030.