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Soybean is a leguminous vegetable of the pea family that grows in tropical, subtropical, and temperate climates. Soybean meal is the dominant and preferred protein ingredient in poultry feed rations.

It consists of more than 36% protein, 30% carbohydrates, and excellent amounts of dietary fiber, vitamins, and minerals. It also consists of 20% oil, which makes it the most important crop for producing edible oil. A by-product from the oil production (soybean cake) is used as a high-protein animal feed in many countries. Soybean also improves soil fertility by adding nitrogen from the atmosphere. This is a major benefit in African farming systems, where soils have become exhausted by the need to produce more food for increasing populations, and where fertilizers are hardly available and are expensive for farmers.

In 2021, the production of soybean meal in Nigeria was estimated to be 467 thousand metric tons. Between 2010 and 2021, the soybean meal crop in the country increased, registering the highest growth in 2011, when the production grew by about 25 percent compared to the previous year. In the last years, the production remained stable.

Production of soybean meal in Nigeria from 2010 to 2021(in 1,000 metric tons)

Global Grain Price Performance (Soya)

Soybean was largely bullish in 2020 recording a YTD performance of 30 percent which saw prices settle at $503.30 in Dec. Prices rose at a Compounding Monthly Growth Rate (CMGR) of 2.4 percent. Average prices of Soybean ($406/MT) in 2020 was 10 percent higher than 2019 price.

The higher prices reflect the previous season’s production shortfalls in soybeans and China’s (the largest importer of Soybean) feed demand following the recovery from the African Swine Fever.

The US-China trade war is expected to dominate soybean trade flow and prices in 2021 coupled with revived Chinese demand for Soybean.

Production of soybean meal in Nigeria from 2010 to 2021(in 1,000 metric tons)

Bringing it to Home

The 2019/20 season saw a 6 percent season-to-date performance with a daily volatility of 4 percent. During the period, prices averaged N131,683.75 reaching its season low in March 2020 at N107,667/ MT of Soybean and peak price of N169,000 on the tenth trading day of 2019/20 season.

At the end of the 2019/20 trading season for Soybean, price settled at N148, 833/MT after it remained muted in the last 12 trading days of the season.

In comparison with domestic prices, international prices outperformed with a 16 percent increase in prices season-to-date. Also, prices in the international market for soybean recorded a 1 percent daily volatility as against 4 percent in the domestic market.

Output Estimation for Soya

Analysis reveals that across all explanatory variables (Land use, input use and weather conditions), there exist a positive correlation with output during the period under review with statistical significance. According to relationships identified, a unit increase in land cultivated for Soybean will see output increase by 719.63Kg. Likewise, a percentage increase in the usage of fertilizers will increase output by 1,309.48Kg. Weather conditions revealed a stronger positive relationship increasing output by 2,224.35Kg. However, holding all variables constant, output is estimated to decline by 448Kg.

Therefore, It is estimated that Soybean output is to increase by c.5 percent from 4,551,418Kg to 4,803,220Kg driven by the significant impact of fertilizer usage and favorable weather conditions in the North West and North East during the 2019/20 wet season.

2021/2022 Soybean Price Outlook

Few months into the 2020/21 season, Soybean prices is more than doubled by 53.19 percent, settling at N228, 000 as at the second trading week of January 2021 from N148, 833.33 in December 2020.

Price movement has recorded a daily volatility of 3.74 percent signifying low swings in prices of Soybean, reflecting the interplay between the demand and supply forces

The surge in prices of Soybean despite during the harvest season which starts late October is reflective of the supply deficit in the market amid growing demand of the commodity in the poultry and aquaculture sectors of the country. Nigeria’s annual average production of Soybean is about 680,000 tons, nearly 25 percent of the country’s national demand of 2.7 million tonnes. Nigeria will increasingly continue to depend on imports to satisfy this growing demand.

However, it is expected that demand for domestically produced Soybean to push prices further northwards given the higher cost of importing Soybean. The import parity for Soybean is $1,023/MT as against $502.51/ MT domestically.

This will weigh on the possible effect of the commencement of African Continental Free Trade Area agreement, opening of the land borders on prices in 2021.

Recently, a projection released by AFEX for 2021/2022 Crop Production Survey shows a higher minimum base price of N170,000/MT in 2021 against N156,000 in 2020 and by December 2021, maize price should range between N170,000/MT and N180,000/MT. During the season, May/June (2022), price would settle between N210, 000 and N230, 000/MT.”

The report also projected an increase in the base price of soybean this year at N320, 000/MT, which would later surge to N350, 000, adding that, “in May/June (2022), soybean price is expected to range between N400, 000 and N450, 000/MT.” The survey showed that the price of soybean witnessed a 40 percentage increase in Q4 2020 above its minimum base price of N199, 000/MT during the period.