Brazilian soybean set to dominate the markets

Findings by the United States Department of Agriculture (USDA) showed that Brazil could soon become the world’s largest producer of soybean, after decades of market dominance by the US.

Soybean production both in the US and Brazil has rapidly increased over the last decade, but the former has always taken the lead as other follows. And now a new report indicates that tables could soon turn, taking us back to 2017-2018 at a time when Brazil edged out its closest rival, the US, for the first time in history.

In a report compiled by USDA’s attaché in Brazil Evgenia Ustinova, the department projected Brazil’s annual production for the year 2019-2020 to rise to the tune of 123.5 million tonnes while placing the US’s production capacity at 100 million tonnes during the same period.

While Brazil’s main growing areas faced prolonged dry spells, the report expects minimal to nil cuts on the country’s overall production. The US, however, was negatively impacted by year-long weather issues, and the same is expected to impact production.

Compared to Mato Grasso Soybean and Corn Producers Association (Aprosoja) projections, Brazil’s production was pegged at 123 million tonnes from 91.4 million acres of land in 2019-2020.

Experts attribute Brazil’s improved production to efficient utilisation of private land. 2019-2020 estimates by Ustinova indicate that Brazil will crush about 44 million tonnes of the bean and yield 8.6 million tonnes of soy oil and 34.1 million tonnes of soy meal.

In the last season, the country’s fields produced approximately 8.1 million tonnes of soy oil and 32.9 million tonnes of soy meal from 42.5 million tonnes of soybean.

The Brazilians themselves are among the largest consumers of soy oil, which is used in the country’s biodiesel industry. This is expected to boost the demand for the commodity locally as well as motivate growers to increase production. Soy meal’s domestic production is also on the rise due to its widespread adoption in the livestock and poultry sector, the reported said.

The report made some reservations regarding the market outlook for Brazil’s soybean: according to the attaché, if China is to focus on the Phase One trade deal and purchase more soy from the US, then it could result in excess stockpiles for Brazil thus hurting country’s prices.

That notwithstanding, the report estimated an increase in Brazilian soybean export from 73 million in 2018-2019 to 75 million in 2019-2020.