For years, the U.S. was the largest soybean producer in the world, but there is a new kid on the block — and that’s Brazil, South America’s largest country and the fifth largest country in the world. “Soybean production (in Brazil) has been steadily increasing over time,” says Bruce Burnett, director of markets and weather information with Glacier FarmMedia. “The country is both clearing land and getting more productivity from existing acreage, and that’s putting a lot of new production area into play.”

How much into play? “The country has been setting production records once every two or three years,” says Burnett.

Indeed. Just a quick glance at the last 10 years of Brazil’s soybean production stats is enough to take your breath away. In 2010/11 the country produced 75.3 million metric tonnes (mmt) of soybeans. Then a new record was set in 2012/13 at 81.5 mmt. The following year, production rose to 86.1 mmt, then to 96.2 mmt in 2014/15. And now, in the current 2019/20 year, Brazil’s soybean output has reached the dizzying heights of 123 mmt, and shows no signs of stopping.

“In the past, everyone looked to the U.S. for price cues, but now everyone looks to Brazil. Brazil has a big crop and that will pressure soybean prices, which will pressure canola prices”
Bruce Burnett

“It’s now the largest soybean producer in the world,” says Burnett. “In a good year, the U.S. can produce more than Brazil, but that will happen less frequently in the future as Brazil continues to increase its area. When you look at South American soybean production in aggregate, it’s been larger than the U.S. for a while, but Brazil has taken everyone over.”

It’s all very interesting, but what does this mean to Canadian farmers? Burnett says it’s worth keeping an eye on the changing dynamics of Brazil’s agricultural production because the ripple effects that such a huge player can have on the global markets can, sometimes, affect decision making here.


So if Brazil has increased its soybean production by roughly two-thirds in 10 years, and if the U.S. continues to maintain its high (roughly 120 mmt per year) output, who’s buying and for what purpose?

“There are a number of buyers for soybean products but the largest is China, which imports roughly 85 to 90 million tonnes of soybeans per year,” says Burnett. “You essentially have the U.S. and Brazil supplying the largest market.”

Soybean meal drives this market. “The oil is really a by-product,” says Burnett. “The meal is used primarily for animal consumption and it’s a principle component in animal feed because of its amino acid profile — it’s ideal for hogs.”

But even as a by-product, soybean oil is a significant commodity. “It’s traded globally, and is probably the second most important oil in the world after palm oil,” says Burnett.

That may surprise Canadian canola growers because that crop is actually far more oil-efficient than soy — oil makes up 44 per cent of a canola seed’s content, compared to only 22 per cent of a soybean seed.

“This is where the oilseed markets have been thrown into a loop by global trade issues,” says Burnett. “‘Fungible’ is when one good is easily substituted for another, and vegetable oil is easily fungible.”

But the meal is where it’s at and China has taken steps to ensure it gets what it needs by investing heavily in Brazilian transportation infrastructure (through the One Belt, One Road initiative), as well as in Brazilian farms themselves. And they’re not alone, says Burnett, adding that the U.S. is also investing in Brazil.


“Until now, the U.S. was the dominant exporter of soybeans, and now it’s being supplanted by Brazil,” says Burnett. The situation is analogous to what has happened in wheat markets over the last two decades, where there was a massive shift from the U.S. and the European Union, which were the major exporters, to new dominant players, Russia and Ukraine.

“It’s not a good or bad thing; it’s just life,” he says. “In the past, everyone looked to the U.S. for price cues, but now everyone looks to Brazil.”

And what are those price cues? “Brazil has a big crop and that will pressure soybean prices, which will pressure canola prices,” says Burnett. “Up to now, Canadian farmers have paid attention to North American canola and soybean markets. Now they have to pay a bit more attention to what’s happening in South American soy and, this year, prices went higher but not significantly higher because Brazil produced a lot more crop.”

Burnett says another thing to consider is that Brazil works to a different seasonal calendar. “It sells into the market when we’re making our planting decisions,” he says.

“In the past, the assumption was that if you hold on to the end of the season as stocks tighten up, you’re going to get better prices. Now we’ve gone to almost the exact opposite situation,” says Burnett. “So be aware that what worked in the past may not work in the future.” FF