Soybean end uses

1. Introduction

Soybean is used to produce such a diverse range of products that the humble soybean is a very important contributor to the global food and stockfeed chains, providing a valuable source of nutrition from the oil, meal and flour. Soy lecithin and soy isolates also play critical roles as ingredient in food formulations. Soybean also provides components used in industrial applications as diverse as biofuels, printing inks and candles!    

This module will outline the various uses for Australia soybean, ranging  from the premium food markets to the soybean crushing market and full-fat meal markets. There are many marketing options for growers, to suit the varieties chosen and the quality of the harvested beans. 

2. Uses of soybean

2.1 Soymilk

This is a growing market as people look to non-dairy milk alternatives. Once only supported by people with a dairy intolerance, this market has grown in consumer acceptance, as evidenced by the allocation of shelf space in the supermarkets. Specific varieties that are high in protein (43%) and of a consistent taste are highly sought after by the soy milk industry.

2.2 Tofu

This is a growing market in Australia with the increase in the Asian population and the growing interest across the broader population for plant-based protein and meat alternatives. The majority of Australia’s exports of soybean grain is to the Asian market, largely for tofu manufacturing. Similar to the requirements for soy milk, varieties with high protein levels are well suited to these markets.  

2.3 Soyflour and Soy kibble

These two products are the largest contributors to the edible market in Australia and are predominately used in the bakery industry as bread improvers and ingredients. This market is stable at 10,000–12,000 t/yr. The protein content is above 38% and the varieties have to be buff or clear hilum.  

2.4 Organic soybean

This is a growing market and the relatively small number of growers can not usually meet the full market requirement in Australia. 

In the edible markets there are also small markets for soybean grain suitable for sprouting, providing germination thresholds are met. 

2.5 Full fat soymeal

This market is expanding slowly with the increase in the consumption of chicken and pig meat. Full fat soymeal is fed mainly to piglets and breeder hens, where the higher fat level (compared to imported soymeal) provides additional energy. Market size is around 10,000–12,000 t/yr and buyers tend to be located within economic transport distance from full fat soymeal crushers. 

2.6 Crushing soybean

Whilst historically this was a viable and valuable market outlet for soybean, in particular those with quality aspects that prevented access to the more premium markets, there are currently no commercial crushers of soybean for oil extraction in Australia. 

2.7 Soybean oil

There is only a relatively small intrinsic demand for soy oil and it is generally used in blended applications. In recent years, much of the soy oil used in blended vegetable oils has been substituted by monounsaturated canola oil in Australia.

Australia does import some soy oil, primarily from South America, for both food and industrial purposes.

2.8 Industrial soybean uses

There is an expanding market for industrial uses of soybean such as biodiesel, lubricants, bioplastics, chemicals and fatty acids. These end products are produced after soybean processing for oil and meal.  

In Australia, the vast majority of this industrial end use is supplied through the import of either the soy ingredient or the completed end product.

2.9 Opportunities for expansion

Within Australia there are many opportunities to expand the soybean industry as well as opportunity to export non-GMO soybean to Asian countries that have strong demand for non-GMO tofu and soymilk varieties.  Other specialty products include, miso, natto, tempe and edamame.

Miso is a whitish-brown, brown, or reddish-brown fermented soup-base paste. This thick, salty paste is high in protein, and low in fat and calories. 

Natto is made of fermented whole soybean. It has a sticky, viscous coating with a cheesy texture. In Asian countries, natto is traditionally served as a topping for rice, in miso soups, and with vegetables. 

Tempeh is made of whole cooked soybean infused with a culture to form a dense, chewy cake used as a meat substitute. It can be marinated and grilled, or used in soups, casseroles, or chili. Tempeh is high in fibre, calcium, B-vitamins, iron, and protein. It is cholesterol-free and low in saturated fat.

Edamame is fresh green soybean pods that can be steamed and used as a green vegetable. Soybean sprouts are popular with the Korean community as another vegetable source.

3. Grower marketing options

There are three main contract options available to soybean growers wishing to market their seed:

1. Fixed/firm tonnage

2. Hectare contracts

3. Guaranteed minimum price

All marketing contracts will be based on the AOF Trade Standards (see below) with delivery periods and delivery destinations (crush plant, storage facility, processor, ex-farm) stipulated in the contract.

3.1 Fixed/firm tonnage

A firm tonnage contract commits the seller (the grower) and the buyer to a set price, set tonnage and set delivery time. These contracts will offer premiums over any other type of contract due to the risk associated with production being held by the grower. Production failure, unless covered by a Force Majeure clause, does not release the seller from the contract.

Advantages and risks

These contracts require the grower to deliver the agreed tonnage at the set price in a set delivery period to a set destination as outlined in the contract. These contracts may be all that is available to the grower if the buyers do not wish to take on the additional production risk.  The advantage of this is that the price is guaranteed, the buyer is known and there is a market for the product. If the crop is harvested, the grower can meet all his requirements and obligations under the contract.  The disadvantage is that, if this is done on a forward contract (for example at planting) and the grower does not produce the quantity or the quality promised in the contract, the grower will have to buy their way out of the contract, called a ‘wash out’. This can be a large cost, in addition to the potential of a reduced income from a failed crop. 

3.2 Hectare contract

The seller agrees to sell the total production of soybean off a contracted area. In this type of contract the grower transfers all the production risk to the buyer. The price is set at the time of contracting and over the course of the growing season, the grower stays in close contact with the buyer to report on the condition of the crop. Regardless of the tonnage of the final crop produced, the seller delivers whatever is produced from the contracted area to the buyer.

Advantages and risks

The hectare contract is usually taken out at planting time, providing the grower with a known price and buyer. The advantage of the hectare contract is that the grower just has to deliver what they produce, reducing their exposure to any production problems.  In hectare contracts the price can either be a minimum price contract or a firm price contract. These contracts will always be set at a discount to firm tonnage contracts, due the buyer taking on all the production risks.

3.3 Hectare contract with minimum/maximum tonnage

The grower agrees to sell a set contracted area with a minimum/maximum yield set into the contract. A general rule of thumb is a minimum of 0.5 t/ha and a maximum of 3 t/ha, but this is all at the discretion of the buyer.

Advantages and risks

This is a hybrid between a fixed tonnage contract and a hectare contract. The grower contracts to sell all they produce from this set area at a set price. The disadvantage of this contract over a full hectare contract is that the grower is committed to deliver a minimum tonnage from these hectares, though this is usually well below their expected total tonnage.  This contract is set at a lower price than a fixed tonnage contract but the price is usually higher than a full hectare contract.

4. Main buyers of Australian soybean

In Australia the soybean market is split into three main categories:

1. Crushing for full fat soymeal 

2. Edible for flour and grits

3. Culinary for Asian foods and soy milk

5. Supply and demand 

The soybean industry is one of the largest and most significant grain industries globally (see Table 1). Along with the whole oils and fats sector, the soybean industry has grown significantly in recent years. Global soybean production has shown a fivefold increase in the last forty years and is expected to continue to grow on the back of demand from the food, feed and fuel sectors.

Growth in food demand is a result of the rapid growth of developing world economies, particularly in Asia where population growth and increased per capita income has driven demand for meal and oil.  This is especially true in Asia and India, whose economies have grown 10% and 7% on average, respectively, over the last five years.

The most rapid growth has been in response to demand for biodiesel. This has largely been concentrated in the US where soybeans have been the primary feedstock for the biodiesel industry.  This is in contrast to Europe where canola/rapeseed has been the feedstock of choice.

Soybean is consumed both directly as human food products and processed into meal and oil for use in both for human food and animal feed applications.

Consumption of soybean as a food is largely concentrated in Asia, particularly China, Japan and Indonesia. In these countries, soybean is either used directly as a whole grain or processed and incorporated as a high protein ingredient into food like tofu, tempeh, soy milk, soy cheese or other products. While this accounts for a relatively small percentage of the overall market (6%), it is still significant in volume terms, and particularly, value. The vast majority (85%) of soybeans are processed into soybean meal and oil. Approximately 98% of soybean meal is  used as a nutritious animal feed, with the balance used to make soy flour and proteins. Of the oil fraction, 95% is used in edible applications, with remainder used for industrial products such as fatty acids, soaps and biodiesel.

5.1 Australian soybean industry

Soybean production is important to Australian farmers and is an important part of Australia’s oilseed industry. The soybean industry is also a valued contributor to regional economies with businesses including input suppliers, service providers, soybean processing facilities and soy food manufacturers based in regional and urban areas. Additionally, the soybean industry also makes an important contribution to the sustainability and profitability of farming systems as a rotation crop through improving soil fertility and as a disease break.

Soybean has wide adaptation from the wet tropics in far north Queensland to the Riverina in southern NSW and can be grown from inland irrigated farming systems to high rainfall coastal environments (Figure 2). 

6. Pricing

The Americas are the major soybean producing and exporting nations and the Chicago Board of Trade (CBOT) is the leading indicator for world soybean prices and pricing trends. Even though the majority of world soybean trade is in soybean for crushing, the price paid for Australian culinary-grade soybeans is typically ‘pegged’, or related to the CBOT price. 

Depending on market conditions at the time, Australian culinary-grade soybeans will invariably trade at a premium to the CBOT price, adjusted for freight to Australia. 

7. Gross margins

Sample gross margins are available in the Rotation and varieties module.

Each farming operation will differ and needs to consider their individual situation. Costs, income and gross margin sensitivity will vary dependent on factors such as regional and seasonal conditions, amount and cost of inputs, freight and market price received.

8. AOF Soybean trading standards

There are certain rules and regulations that growers need to meet when delivering soybean to buyers. These standards have been developed by the Australian Oilseeds federation and are maintained by Soy Australia. The Standards are updated annually, as required, and are available at both:

http://www.australianoilseeds.com/Technical_Info/standards_manual    and  www.graintrade.org.au/commodity_standards 

Growers are recommended to check the above websites to be assured of the latest version.

CSO 8 Crushing Grade Soybean

Clean, sound, whole soybean of dark and light hilum varieties suitable for oilseed crushing and animal feed production.

CSO 7 Edible Grade Soybean – Culinary

Edible soybean comprising clean, sound, whole soybeans of light hilum varieties suitable for production of tofu, tempeh, soymilk etc

CSO 6 Edible Grade soybean – Milling

Edible soybean comprising clean, sound, whole soybeans of light hilum varieties suitable for milling into flour.

9. Soybean variety information

When choosing a variety it is important to consider the overall yield stability and potential market demand.  Some varieties will inevitably out-perform others in different years depending on seasonal conditions. However, yields alone may not determine gross returns since market-preferred varieties may command a significant price premium. Growers are encouraged to communicate with grain buyers regarding variety preference and pricing each season before choosing an appropriate variety for their location.

The Rotation and varieties module provides information about variety suitability for each growing region and the marketability of each variety.

Soybean yield and quality may be compromised if grower-kept seed is not pure. Strongly consider replacing seed at least every three years with Soy Australia endorsed industry-approved scheme seed.

Due to a reduction in soybean funding there is no recent yield comparison data that is replicated across regions. Please discuss local results with agronomists, seed suppliers, marketers, State Government agronomists/extension officers or CSIRO scientists.