MarketsFarm — Brazil is set to pass the United States as the world’s top producer of soybeans during the 2019-20 marketing year, according to a report from the U.S. Department of Agriculture (USDA).
As soybean production in both countries has risen dramatically over the last 10 years, the U.S. continued to lead the world in production, with Brazil second. The one exception was in the 2017-18 marketing year, in which Brazil slightly edged out its main competitor.
In a report penned by USDA’s attaché in Brazil, Evgenia Ustinova, and released Dec. 27, production has been forecast to hit 123.5 million tonnes in 2019-20, while U.S. production is expected to drop under 100 million tonnes. The U.S. crop was hurt by year-long weather issues, but in Brazil a dry spell in the main growing areas shouldn’t affect its overall production. However, the USDA attaché noted the Matopiba region will likely experience below average production.
In comparison, the Mato Grasso Soybean and Corn Producers Association (Aprosoja) forecast Brazil’s total soybean harvest to reap 123 million tonnes on 91.4 million acres. Ustinova pegged Brazil’s acreage at 90.9 million.
One of the major factors pushing up Brazil’s soybean production was greater domestic usage. Ustinova estimated Brazil will crush approximately 44 million tonnes of soybeans in 2019-20, to produce 34.1 million tonnes of soymeal and 8.6 million tonnes of soyoil. In 2018-19, the Brazilian crush amounted to 42.5 million tonnes and created 32.9 million tonnes of soymeal and 8.1 million tonnes of soyoil.
Also, with Brazil’s biodiesel industry heavily dependent on soyoil, the coming expansion of that fuel’s production will translate into more soyoil usage. As for soymeal, rising domestic consumption is being driven by Brazil’s livestock and poultry industries, the attaché wrote.
There was some caution in Ustinov’s report, specifically the effects of the U.S.-China Phase One trade deal on Brazil. She noted if China is required to purchase more soybeans from the U.S. that could mean China acquiring less from Brazil.
Nevertheless, the attaché projected Brazil’s exports to increase to 75 million tonnes in 2019-20 from 73 million in 2018-19. The attaché cited Argentina’s export taxes on its soybeans, along with lower U.S. production, and the Brazil real losing ground to the U.S. dollar. That’s made Brazil’s exports more attractive, as the real has slipped from 3.75 reais to the U.S. dollar to 4.20.
— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.