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November 2001 Edition
Growth in World Soybean Trade Benefits Brazil
As the demand for soybeans has surged in recent years, Brazil has been able to increase exports both relative to their competitors, as well as in absolute terms. Brazil’s exports have grown from 8.9 million tons three years ago to an estimated 17.5 million tons in the coming October-September year. This growth represents a rise in Brazil’s world market share from 23.1 percent three years ago, to 30.5 percent expected this coming year. Such a dramatic expansion has been fueled by higher yields and 2.6 million more hectares harvested, which led to more than 10 million additional tons being produced. Growth in overall output has been induced by profitable returns for Brazilian farmers at a time of slim margins for their international competitors. The area increase has been possible because of the devaluation of the Brazilian Real, which has fallen in dollar terms about 56 percent, from 1.193 Reals to the dollar at the beginning of November 1998, to 2.685 Reals to the US dollar on November 1, 2001. Because trade occurs in dollars, the income of farmers in Brazil rises as the real declines in relation to the dollar. Since this increase in reals received is greater than any increase in production inputs purchased in dollars, which is largely limited to certain types of fertilizer, it is increasingly profitable to expand production in Brazil.
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Approved by the World Agricultural Outlook Board/USDA
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