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August 19, 2015

U.S. vs Brazil in Soybean and Corn Production

When we talk about the crop production in the U.S. we always refer to bushels per acre and billion bushels, but when we talk about Brazil we refer to kilograms per hectare and million metric tons. Let's put them both in metric terms and compare.

In the August Crop Report the 2015 U.S. soybean crop was estimated at 106.5 million tons on a yield of 3,150 kg/ha. If the weather cooperates in Brazil, the 2015/16 soybean crop could be 100 million tons with a yield of 3,050 kg/ha. As you can see, the U.S. and Brazil are about even in soybean production and in soybean yields.

The big difference though is that the Brazilian soybean acreage will continue to expand in future years while any expansion in U.S. soybean acreage will be limited. It is just a matter of time before Brazil will consistently be the largest soybean producer in the world.

In the August Crop Report the 2015 U.S. corn crop was estimated at 347.6 million tons on a yield of 10,590 kg/ha. If the weather cooperates in Brazil, the 2015/16 corn crop could be 85 million tons on a yield of approximately 5,200 kg/ha. As you can see, the U.S. corn production is approximately 4 times larger than in Brazil and the nationwide corn yield in the U.S. is approximately double the corn yield in Brazil.

Corn production in Brazil has a long way to go and they will not rival the U.S. in corn production any time in the foreseeable future, but Brazil has already emerged as a significant competitor in corn exports and corn exports from Brazil will continue to increase.

The agriculture sector in Brazil accounts for 21% of the Grosso Domestic Product, 27% of the employment, and 43% of the exports. According to Bruno Lucchi, technical superintend of the Agricultural and Livestock Confederation of Brazil (CAN), the success of Brazilian agriculture is based on three things - rural credit, technical assistance, and research. Recent studies published by the University of Sao Paulo indicate the expansion of rural credit has been the key to agricultural expansion in Brazil.

In the year 2000, the total amount of credit available for producers was R$ 16 billion and Brazil produced a total of 100 million tons of grain. By the 2014/15 growing season, the amount of credit available to producers increased to R$ 180 billion and the total production of grain increased to 200 million tons. The vast majority of the yearly farm program in Brazil consists of low interest production loans for Brazilian producers. As long as the money continues to be available, Brazilian agriculture will continue to expand.