USA – Brazilian soybean production is expected to increase by 9% to 124 million tonnes compared to the previous year despite low demand from China.

According to Global Agricultural Information Network (GAIN) report from the U.S. Department of Agriculture, planted area for soybeans is expected to increase by only 1% even as farmers remain uncertain of the trade relations between the USA and China.

Soybean yield is forecast to increase by 8% in 2019-20, from 3.16 tonnes per hectare to 3.4 tonnes while exports will climb 9% in 2019-20 to reach 75 million tonnes, though this is still low compared to 84.1 million tonnes shipped in 2017-18.

“Although in the last five years planted area averaged 4% annual growth, Brazilian producers are expected to hedge their bets next season given the uncertainty surrounding soybean demand from China, which is the largest consumer of soybeans, as well as the larger importer of Brazilian soybeans,” the USDA said.

“In addition, most of the available arable land has already been tapped in key producing states, and further sizeable area increases would require large upfront investments to convert degraded pasture land.”

In the year 2018-19, soybean demand from China grew 20% due to the ongoing trade war between the United States and China.

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In July last year, China stopped some soybean imports from the US after a series of tariff barriers were put in place on critical goods.

Imports were further dampened as China imposed an additional 25% import tariff on U.S. soybeans.

“If current trade tensions with the United States are resolved, the local market expects that demand from China will also subside from the peak reached last year, and perhaps even fall below the 75% of total volume sourced that has been seen in recent years,” the USDA said.

USDA had earlier indicated that demand for oilseed in China remains stable due to rising chicken, beef and aquaculture production, something set to trigger oilseed imports.

The report estimated that China’s 2019/20 soybean production will stand at 16.4 million tonnes, a 4% increase from the previous year.

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