Strong income and population growth in developing countries generates increasing demand for vegetable oils for food consumption and for protein meals used in livestock production. World soybean trade grows at an average annual rate of 3.8 percent through the projection period compared with rates of 2.9 and 2.3 percent for soybean oil and soybean meal.
Many countries with limited opportunity to expand oilseed production continue investment in oilseed crushing capacity, such as China and some countries in North Africa, the Middle East, and South Asia. As a result, oilseed import demand is maintained above protein meal import demand throughout the baseline. However, strong competition in international protein meal markets is expected to pressure crushing margins and shift some of the import demand for oilseeds to cheaper meals. The steady competitive pressure of new oilseed crushing capacity is expected to result in many inefficient crushers going out of business.
Growth in import demand for total vegetable oils exceeds growth in import demand for either oilseeds or protein meals. Consequently, economic incentives to produce palm oil and high-oil content oilseeds, such as rapeseed and sunflower seed, strengthen through the baseline period.
China's policy of expanding domestic crushing capacity instead of importing protein meal and vegetable oil significantly influences the composition of world trade by raising international import demand for soybeans and other oilseeds rather than for products.
Brazil's rapidly increasing area planted to soybeans enables it to gain a larger share of world soybean and soybean meal exports, despite increasing domestic feed use. Its share of world exports of soybeans plus the soybean equivalent of soymeal exports rises from about 35 percent in recent years to 45 percent by 2014.
