Sluggish Economy Impacts Thailand’s Soybean Industry
In the wake of a slow economic recovery, Thailand’s soybean crush industry faces challenges that are expected to persist through the 2023-24 and 2024-25 seasons. Predictions suggest that the industry will operate significantly below its five-year pre-pandemic average, signaling a slow recuperation from the COVID-19 pandemic’s impacts on domestic consumption and agricultural production.
The Global Agricultural Information Network (GAIN) report by the US Department of Agriculture’s Foreign Agricultural Service indicates a modest growth projection for Thailand’s soybean crush. Expected increases of 2% in 2023-24 and 3% in 2024-25 starkly contrast the pre-pandemic average annual growth rate of about 5%. This deceleration is attributed to lagging domestic consumption rates of both soybean oil and soybean meal, the latter being crucial for swine feed production.
Soybean crush totals are anticipated to reach 2.43 million tonnes in 2024-25, a slight rise from 2.36 million tonnes in the preceding year. With domestic soybean production hovering between 50,000 to 60,000 tonnes, Thailand heavily relies on imports to satisfy its soybean demand. Predominantly sourced from Brazil, these imports are expected to slightly increase to 3.3 million tonnes in 2024-25 from 3.27 million tonnes.
Approximately 70% of the imported soybeans find their use in the production of cooking oil. Thailand hosts four active soybean crushing facilities with a combined daily capacity of 12,500 tonnes, currently operating at up to 70% of their total capacity. The primary revenue for these crushers comes from the sale of soybean meal, which is primarily used as animal feed.
The report also highlights that crushers are maintaining high levels of soybean inventories due to diminished domestic consumption rates. This trend follows an economic downturn experienced in the latter half of 2023, which affected both the cooking oil and animal feed sectors negatively.
In terms of feed formulations, full-fat soybeans are often preferred when their cost is lower than the combined expenses of soybean meal and oil components. The FAS report anticipates a 3% annual increase in demand for full-fat soybeans for both the 2023-24 and 2024-25 seasons. Despite this increase, demand is expected to linger around 600,000 tonnes annually, a figure significantly lower than the 700,000 to 800,000 tonnes demand seen prior to the African swine fever outbreak in 2021-22. This diminished demand reflects a slow recovery in swine production anticipated to continue through 2023 and 2024.
Thailand’s soybean industry is evidently facing challenging times, as it navigates through the repercussions of a sluggish economy and external health crises. With a cautious eye on the future, stakeholders within the industry hope for a gradual recovery that will lift the sector back to its pre-pandemic vibrancy.
