Brazil Sees Reduction of Soybean Yields Due to Drought
Wed, April 21, 2021

Brazil Sees Reduction of Soybean Yields Due to Drought

Farmers in Brazil, mainly in the southern states, are expecting a cut in their soybean yield prospect because of drought. / Photo by: Igor Stevanovic via 123rf

 

Farmers in Brazil, mainly in the southern states, are expecting a cut in their soybean yield prospect because of drought. The Brazilian consultancy AgRural has adjusted its soybean production forecast this week to 124.3 million metric tons, a reduction of more than 1 million metric tons than the projection a week prior.

The Federation of Agricultural and Livestock of Rio Grande do Sul have also estimated 10 million metric tons of soybean crops from its previous estimate of 19 million metric tons of soybean for the state. Economist Antonio da Luz from the Federation said that they would even be “lucky” if they can harvest 10 million metric tons of soybeans. While some government institutions in the country forecast larger reductions for some states, the AgRural estimate shows that there will be bigger yields in other states and it would compensate the losses in drought-affected states.

As of today, Brazil is the only country in South America that chooses not to close its borders as other countries have done to respond to the coronavirus outbreak. When it comes to trade, airports and ports in Brazil are still free to move any cargo. Agricultural consultancy Datagro shared that 57.8% of the projected 123.62 million metric tons of projected soybean was sold. In the same period in 2019, the country’s sales of soybean were at 44.2% production.

Rush in the Sales of Soybean

Datagro’s market analyst Flavio França Jr. said that the best quotes during the first days of March and the second half of February 2020 helped increase the sales of soybeans in Brazil. He believed that the rush in sales was because the country’s real (currency) has devalued to 50¢ against the U.S. dollar following the coronavirus outbreak. The prices of soybean in recent days also set a record of nearly $20 for every bag of 60 kilograms of soybeans.

The recommendation of market analyst Carlos Cogo to Brazilian farmers is to sell their soybeans not under basis contract but spot contracts. In a basis contract, the seller establishes the price based on the spread between the cash and the futures market. Spot contract, on the other hand, is a contract of selling or buying a commodity for immediate settlement on the spot date.

Cogo, however, warned that there could be a big risk brought by the coronavirus pandemic. Crops planted between 2020 and 2021 may face difficulties because of a lack of agrochemicals and fertilizers if the global supply chain will be more affected by the virus. Real-time statistics provider Worldometer has shared that Brazil already has 647 coronavirus cases, 7 deaths, and 2 recovered as of March 20. The number of COVID-19 cases saw a significant increase on March 07 (19 cases) to March 13 (151 cases).

 

The prices of soybean in recent days set a record of nearly $20 for every bag of 60 kilograms of soybeans. / Photo by: Ljiljana Turinski via 123rf

 

Soybean Culture in Brazil

Early reports show that it was around 1882 when soybean culture came to Brazil. Between 1900 and 1901, soybean culture reached the state of Rio Grande do Sul. It has the same climatic conditions in the southern US, where the introductory varieties of soybeans came from. This was described in a 2012 study by Eduardo Antonio Gavioli titled “Explanations for the Rise of Soybean in Brazil.” It detailed that soybean was established as the main crop of agribusiness in Brazil in the 1970s. Soil fertility increased the use of vegetable oil rather than animal fats, tax incentives, the emergence of efficient and dynamic cooperatives, and the establishment of industrial soybean processing infrastructure are some of the factors that contributed to the development of the soybean culture in Brazil.

Soybean Production: Statistics

Database company Statista shared that soybean production in Brazil was estimated at 75.32 million metric tons in the crop year 2010 to 2011. It slightly decreased to 66.38 million metric tons in 2011 to 2012 crop year and increased again to 81.5 million from 2012 to 2013. For the period 2013 to 2014, crop production was 86.12 million and it has been increasing overall since that crop year.

China is, by far, the leading country of destination for Brazilian soybean exports. It accounts for 78% of the total soybean exports or approximately US$26 billion. From January to August 2019, Brazil also exported 50.9 million tonnes of soybeans to China or 78.8% of its total exports. China’s trade war with the United States increased China’s demand for soy from alternative sources. In the same period in 2017, China accounted for 77.5% of Brazil’s total export of the commodity. This was reported by Brazil’s agriculture ministry via Reuters. Even with the global scare of coronavirus, the demand for Brazilian soybeans by China remains strong.

Our World in Data, a scientific online publication that focuses on large global problems, likewise published the average soybean yields of Brazil, measured in tonnes per hectare in the following years: 2000 (2.40 t), 2002 (2.57 t), 2003 (2.80 t), 2004 (2.30 t), 2006 (2.38 t), 2008 (2.82 t), 2010 (2.95 t), 2012 (2.64 t), 2014 (2.87 t), 2016 (2.90 t), 2017 (3.38 t), 2018 (3.39t).

Countries with the highest soybean yields in 2018 were Turkey (4.26 tonnes per hectare), Brazil (3.39 t), United States (3.47 t), Egypt (3.2 t), Spain (2.87 t), France (2.6 t), Italy (3.49 t), and Ukraine (2.58 t), among others.

Soybeans or soya beans are a type of legume that is often eaten in whole or processed. Soy products available in the market today are soy flour, tofu, soy milk, soy sauce, soybean oil, and soy protein. Soybeans are rich in phytonutrients and antioxidants linked to several health benefits. This is why the commodity has been used as lactose and vegetarian alternative to protein in many foods. A hundred grams or 3.5 ounces of boiled soybeans already contain 173 calories, 16.6 grams of protein, 9.9 grams of carbs, 3 grams of sugar, 6 grams of fiber, and 9 grams of fat (Saturated, Monounsaturated, Polyunsaturated, Omega-3, and Omega-6). These nutrition facts were provided by the medical information platform Healthline.

Although the situation in the Rio Grande do Sul, Brazil now is not as severe as that of farmers in the other regions of the country, the loss in their profit is still included in the overall losses of the country. Farmers in the country can help undo the damage by focusing on drip systems and irrigation, for instance, to help crops during dry conditions.