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By: Danny Zimny-Schmitt
The U.S. has long been the world’s largest producer of soybeans, but now Brazil is giving us a run for our money to keep that crown.
Iowa State University agricultural expert Chad Hart says that long-term trends in weather patterns have put Brazil in a position to overtake the U.S. as the world’s leading producer of soybeans.
Brazil has undergone a steady expansion of acreage dedicated to soybeans over the past few decades. In 1995/1996, Brazil harvested from 27 million acres of soybeans, while this year it is expected to harvest 68 million acres. The yield per acre is remarkably similar between the two countries, with 2.97 tons per hectare of soybeans harvested in the U.S. and 3.01 tons per hectare in Brazil.
Brazil is also making gains on the U.S. in the corn sector: it has gone from producing about 40 million tons a decade ago to 70 million tons today. However, the U.S. is still the king of corn, especially in the yield per acre, harvesting 164 bushels per acre compared to Brazil’s 70 bushels per acre.
While Brazil ramps up production, soybeans and corn will still be very profitable crops for American farmers to grow. However, they are still subject to world market prices. After being bid up to an all-time high last August, the price of soybeans futures in Chicago have slumped recently on speculation of a record crop from Brazil this year.
For the first time, the USDA predicts that the 2013 Brazilian soybean crop will exceed 83.5 million tons (with 38.4 million tons expected to be exported), which is greater than the predicted 82.1 million tons for the U.S. soybean crop (with 36.6 million tons expected for export). While 2013 will likely be the first year Brazilian production exceeds U.S. production, it will be the second time Brazil’s exports exceed U.S. exports, after doing so in the 2005/2006 season.
The U.S. is currently the largest exporter of soybeans to China, followed by Brazil and Argentina. Nevertheless, China is talking about shifting orders from Brazil to Argentina due to infrastructure issues slowing down Brazilian shipments. This is largely because Brazil relies on trucking to move the beans the approximately 600 miles from the central-west Brazilian soy heartland to shipping centers on the Atlantic coast. Bloomberg reported that “the line of trucks waiting to unload at Brazil’s busiest port surged to a record 15 miles long this month, while a total of 212 vessels awaited loading.”
While its production roars ahead, Brazil may find itself at odds with its crippled infrastructure system as it tries to increase its exports. To truly steal the soybean crown from the U.S, Brazil needs to invest in its transportation system as much as it needs to invest in its agriculture.
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