The Brazilian soybean acreage has doubled since the year 2000, which means a growth of 22 million hectares. This means that the country has a huge impact on the soybean market. However, how far must the soybean price fall to stop the acreage expansion in the country?
The soybean area in Brazil has increased by about 2000 million hectares since the year 22 to 36 million hectares. Although until 2004 this was mainly at the expense of the Amazon region, the area growth has largely been achieved on grassland. This is evident from new figures from Rabobank.
Grassland not used optimally
In Brazil, approximately 168 million hectares are used for grassland, which is almost 20% of the total area in the country. However, a large part of this (30 to 40 million hectares) is not optimally used by farmers. This is because the profit from the beef cattle kept here is lower than the profits that can be achieved by growing soy.
Rabobank figured that when the price for soybeans is at least €310 per ton, soybean cultivation yields a higher profit. However, with a soy price of €277 per tonne, keeping beef cattle is more interesting for the Brazilian farmer. In short: at a soy price of around €280 per ton, the area expansion in Brazil will be able to stop. This is the price including transport costs.
Further expansion expected
However, there are many factors that can still influence the above calculation. This includes, among other things, the location in the country and the transport options in that region. Moreover, beef cattle prices in Brazil are expected to rise in the coming years, which will only increase the aforementioned lower limit.
If we look at the current soy price in Brazil (including transport costs), we see that it is currently €300 per tonne. However, the price for soybeans this season is lower than in previous years, which is partly due to the trade war between China and the United States. It is therefore likely that it will still be interesting for farmers in Brazil to expand the soy area for the time being.
China is expanding area
What also plays a role is what happens in other countries. This is how the soy acreage in the United States is the ceiling. The acreage in China, the largest importer of soybeans in the world, will also show enormous growth. The Chinese Ministry of Agriculture recently announced that the area will grow by more than 2019% in 16.