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Canada has new top soybean buyer

Iran purchased 383,000 tonnes of soybeans from January to the end of September, worth $181 million

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Glacier FarmMedia – In 10 seconds or less, name the Number One buyer of Canadian soybeans in 2020.

Japan? The United States? China?

The answer is Iran.

Why it matters: Canada has struggled to replace soybean demand from China since it disappeared in 2019.

From January to the end of September, Iran bought 383,000 tonnes of soybeans from Canada, at a value of $181 million, based on figures from Statistics Canada’s International Merchandise Trade database.

Japan is the Number Two destination, with 222,000 tonnes at a value of $184 million.

If shipments to Iran are strong this fall, total exports for 2020 could be similar to 2019, when Canada exported $313 million in soybeans to Iran.

The Middle East nation has become a major customer of Canadian soybean exporters, partly out of necessity.

In 2018, Canada sold $1.7 billion worth of soybeans to China, dwarfing sales to all other nations.

In 2019, exports to China sank like a stone, dropping to $33 million.

“There hasn’t been a single vessel (of soy) that left Canada (for China) since the end of December 2018,” said Ron Davidson, executive director of Soy Canada.

“That’s after 11 straight years of vessel shipments to China.”

December 2018 coincides with the arrest in Vancouver of Meng Wanzhou, the chief financial officer of Chinese telecommunications company Huawei.

The U.S. Department of Justice has asked Canada to extradite Meng to the United States, where she would face charges of breaking international sanctions and doing business with Iran.

China didn’t make an official announcement regarding Canadian soybeans, but when annual sales go from $1.7 billion to $33 million, Chinese officials likely instructed buyers to avoid Canadian soybeans.

Exports to China are up in 2020 with Canada shipping $116 million in soybeans from January to September. However, that’s well below levels from 2016 and 2017, when sales to China were close to $1 billion.

Almost all of the shipments to China in 2020 have been containers of food grade soybeans, Davidson said.

In the last month or so, interest from China has picked up.

“Since the USDA began lowering production data for both the U.S. and South America, I have received numerous telephone inquiries from individuals seeking soybeans for export to China, but am not yet aware of any confirmed sales,” Davidson said.

The exports to Iran aren’t a huge surprise. In recent years, Iranian buyers have purchased a fair chunk of Canadian soybeans. Exports to Iran averaged about $65 million from 2014-18.

In lieu of China, Canadian soy has been sold to Europe, Vietnam, Thailand and other nations. Japan remains a major buyer.

In 2019, sales to Bangladesh spiked, jumping to $256 million. That market has declined sharply in 2020, with sales of $30 million over the first nine months.

It’s positive that Canada is finding markets other than China for soybeans, but in the long run, Canadian growers and exporters need access to the Chinese market.

“Of the 150 million tonnes (of soybeans) traded in the world every year, 95 to 100 (million) are going to China,” Davidson said.

“To be out of the market that takes two-thirds of the world’s trade, is a huge problem.”

This article was originally published at The Western Producer.

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