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Brazil poised to surpass the U.S. in soybean productionqrcode

Aug. 8, 2017

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Aug. 8, 2017
Brazilian farmers have steadily increased their market share in world grain and oilseed production over the last few decades and in the next decade, they will surpass the United States in soybean production. Brazil is already the world's largest soybean exporter and they are poised to become the largest soybean producer as well.
The Food and Agriculture Organization of the United Nations (FAO) recently released a study titled "Agricultural Perspectives 2017-2026" in which they forecasted the growth rate of soybean production in the three main soybean producing countries - the United States, Brazil, and Argentina.
As reported in the newspaper Gazeta do Povo, the FAO report estimated that Brazil's soybean production would increase at an annual rate of 2.6% over the next decade with Argentina increasing 2.1% and the United States increasing 1%. In 2026, soybean exports would be dominated by Brazil and the United State and combined, they would account for 89% of the worlds soybean exports. Over the next ten years, world soybean production is expected to increase on average 1.9% per year, which is less than the 4.9% per year it increased over the last decade.
Soybean production in the United States and Brazil is currently nearly equal. Conab estimated that Brazil produced 113.9 million tons of soybeans in 2016/17 and the USDA is estimating that the United States will produce 115.8 million tons in 2017. Going forward, there are millions of hectares in Brazil that could be converted to agricultural production, whereas agricultural expansion in the United States will be constrained due to lack new acreage. Over the past ten years, Brazil and Argentina have contributed the most to the expansion of row crop production.
The president of the Brazilian Association of Soybean Producers, Marcos da Rosa, stated that long term projections indicating constant rising production levels have put downward pressure on prices. End users are reluctant to drive up prices if larger supplies are expected to come on line. Recent record soybean production in both North America and South America have resulted in very low soybean prices.
The head of the technology transfer division of Embrapa (Brazil's agricultural research service) Alexandre Cattelan, feels the growth potential for Brazilian soybean production is actually greater than what was indicated by FAO. He feels that prices and logistical constraints may limit expansion below what could be possible.
The current situation in Brazil is a good example of the logistical constraints. Brazilian farmers are still holding a significant portion of last year's record soybean crop while a record crop of corn is also being harvested, resulting in huge piles of corn being stored outside due to lack of storage space. Brazil's agricultural production has expanded at a quicker pace than they have been able to build additional grain storage.
Mr. Cattelan feels that instead of just exporting soybeans and corn, it would be much better to utilize the grain and soybean meal production to produce poultry, pork, and beef. Another option is to utilize soybean oil for biodiesel production.
Over the next decade, the FAO report estimates an 11% increase in world wheat production, 14% increase in corn production, 10% increase in secondary grain production, and 13% increase in rice production. For beef production, the two main exporting countries, which are Brazil and the United States, will account for 70% of the increased beef exports over the next decade.


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