[Article] Brazilian soy towards 130 million tons

USDA sees record Brazilian soybean harvest in 2020/21 above 130 million tons.

Soybeans, the main crop of Brazilian agribusiness, have become increasingly important on the national and international scene. With its high percentage of protein, it is consumed on a large scale for animal nutrition and is gaining more and more space in human nutrition.

“I came from China and that’s where I’m going.”
China, the country of origin of soybeans, is today the biggest importer of the oilseed. In 2020, the Asian giant imported approximately 20 million tons (Mt), and in the last 20 years this volume has more than quadrupled, today importing more than 85 Mt. And during that same period, the Brazil, USA and Argentina were and continue to be the main producers and exporters of the world.

Brazil began to stand out at the end of the 70s, producing a modest 10 Mt. Today there are more than 120 Mt per year, which makes Brazil the largest soybean producer in the world. The oilseed represents almost 50% of the 250 million grains to be produced in the country, according to the latest data released by CONAB (National Supply Company).

The records don't stop there. The year 2020 arrived with the dollar at R$ 4.00, climate uncertainty, a trade agreement between the USA and China, the spread of the coronavirus, the closure of ports and the fall of stock markets, and in the midst of all this confusion, the real devalued significantly and the price of soybeans on the stock exchange plummeted, making the price of the Brazilian oilseed very attractive for the foreign market. Never has so much soy been exported as in the first half of the year. In March, there were more than 10 Mt and in April and May we exceeded 15 Mt.

Check out some images below* of Brazilian soybean ships heading to China.

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*Source: Refinitive Eikon, twitter @kannbwx

All the events mentioned above gave many producers reason to celebrate, but the domestic market suffered greatly with the rise in the price of soybeans which, consequently, also raised the price of soybean meal, which is used on a large scale for animal nutrition. With the rise in prices, breeders were forced to look for alternative options such as peanut and cotton meal which, as they were in between harvests for their crops and with a significant increase in demand, also saw a considerable increase in prices.

Rio Grande do Sul had a production projection for this year of approximately 19 million tons, but due to the weather, unfortunately, it suffered a huge crop failure that meant this year's reduced harvest was around 10 million. of tons.

Those who still see agribusiness as farms without infrastructure and/or technology urgently need to update themselves. Investments in the development of Brazilian agribusiness have been immense and, compared to the United States, we are ahead of schedule, as Daniel Huber, renowned American agribusiness consultant, said during his talk at the Agribusiness Summit 2019, event carried out by Estadão in São Paulo.

Today agribusiness attracts young people, Fintechs and Startups. Mechanization relies on cutting-edge technology, using machinery powered by computers, drones to combat pests, monitoring soil moisture, among many other tools. Farmers are increasingly specializing in dealing with hedging mechanisms such as futures contracts, options market and barter (exchange of inputs for grains), which help with financial protection through market fluctuations.

With all these investments in technology and an increase in interest on the part of farmers in producing soy, due to its high liquidity, production has been growing and who knows, next year, with favorable weather conditions throughout the country, we will reach the record 130 million tons harvested.

Per: Frederico Lampe | Aboissa Commodity Brokers

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