Brazil a stronger U.S. competitor in soybean sales

In the past decade, Brazil has improved its network of roads, railways, and ports, “significantly altering” its competitiveness with the United States in the world soybean market, said an Agriculture Department report on Thursday. Continued improvements would bolster Brazil’s standing as the world’s largest soybean producer and exporter.

Brazil is forecast by the USDA to export twice as much soybeans as the United States during the current trade year and to account for 58% of soybeans sold internationally. The U.S. share of the world market would shrink to 28%, down from 38% two years ago. At the same time, domestic demand is rising for U.S. soybean oil as a feedstock for biomass-based diesel.

“Improvements in Brazil’s overland transportation infrastructure have resulted in a $21-per-metric-ton decrease in transport costs over the past decade, enhancing the country’s competitive position,” wrote analysts at the Economic Research Service. Development of the country’s northern ports, closer to the Panama Canal, have also lowered overall transport costs and narrowed the advantage long held by soybean growers in the U.S. Midwest.

“Despite the progress achieved, Brazil’s transportation infrastructure and ports still face challenges when it comes to increasing efficiency, reducing operating costs, and effectively attracting investment to sustain the projected expansion of the agricultural sector,” the report said.

Higher-cost trucking is the main mode of transport in Brazil, while U.S. soybeans are shipped mostly by rail and river. And the distance from farm to port is shorter for most of the U.S. crop. The pandemic disrupted supply chains and resulted in virtually equal landed prices for U.S. and Brazilian soybeans in China, said the ERS report.

The paving of BR-163, the main highway through the landlocked Brazilian state of Mato Grosso, completed in 2019, reduced the cost of hauling soybeans to the northern port of Miritituba, on the Tapajós River. One-third of Brazil’s soybean exports moved through its northern ports in 2021.

The costs of soybean production were higher per acre in the United States than in Brazil, but soybean yields per acre also were higher in the U.S.

The USDA’s long-term baseline projects that soybean production in Brazil will rise to 214 million metric tons in the 2032/33 marketing year, up from 127 million metric tons in 2021/22. “Brazil’s soybean exports are expected to reach 130 million tons by MY 2032/33,” said the report, compared to 79 million metric tons in 2021/22.

Brazil surpassed the United States as the world’s largest soybean exporter more than a decade ago.

The USDA report on soybean competitiveness for Brazil and the United States is available here.