For the first time in more than 50 years, the world’s top soybean producer won’t be the US.
Brazil has been knocking on the US’s door for some time now; last season, the US nearly relinquished its soybean throne, edging ahead of Brazil’s harvest by a mere 55,000 tonnes. But according to USDA estimates (pdf p. 5), Brazil is finally slated to harvest more soybeans than the US this year. In total, Brazil is expected to produce 88 million tonnes (97 million tons) of the beans, while the US is expected to produce roughly 85 million tonnes.
The prediction is driven partly by the expectation of heavy droughts in the US’s midwest region, which will likely reduce harvests. Rising global soybean prices and a weaker Brazilian real also contribute to the prediction, since they help incentivize Brazilian farmers to dedicate more land to this year’s soybean harvest. The USDA estimates that Brazilian farmers will increase the amount of land dedicated to soybean harvesting by 4% from last year.
China, the world’s largest consumer of soybean, will be paying close attention to the shift. In 2012, China imported 58.4 million tons of soybeans—roughly 80% of its total consumption and 60% of global soybean imports—thanks to its prevalence in cooking oil, tofu products, and animal feed. The country has relied more heavily on US soybeans as it has shifted its domestic soybean production to more profitable crops like rice and corn. This season’s harvest is already expected to be the smallest since 1993. But US supply isn’t reliable, either; this year’s droughts alone have already left nearly 40% of the US soybean crop in poor or very poor condition. At the current rate, the US could completely deplete its supply by this coming February, Northstar Commodity analyst Jason Ward told the Associated Press late last month.
That’s where Brazil comes in. The USDA projects Chinese imports of soybeans will reach a record 69 million tons in 2014. Brazil, the world’s largest soybean exporter last year and the second largest soybean exporter to China, is well-positioned to make hay.