Soy Expansion in Brazil Can Face China's Challenges
- INTELIGÊNCIA AGRO
- Feb 21
- 3 min read
Katherine Buso (*)
Brazil, the world’s largest soybean exporter, has increased its planted area for 18 consecutive years, an impressive feat that has solidified its leadership in the global market.
However, excessive reliance on Chinese demand and shifts in the global economy raise questions about how long the country can continue expanding production without facing an oversupply scenario.
This article explores the challenges and risks that Brazil’s soybean sector may encounter in the coming years.
Brazil’s Rise as the Global Soybean Leader
At the turn of the century, the United States dominated the global soybean market, accounting for over 50% of world exports, while Brazil held just under 30%. However, a series of weather-related crop failures in the U.S. between 2012 and 2013 allowed Brazil to take the lead, a position it maintains to this day. Currently, Brazil accounts for about 57% of global soybean exports, while the U.S. holds 28%.
The expansion of Brazil’s soybean area has been driven by growing Chinese demand, which increased by 175% over the past 18 years. During the same period, Brazil’s soybean area grew by 130%, cementing the country’s role as the top supplier of soybeans to China, which buys over 70% of Brazil’s exports.
Lessons from the United States
The U.S. experience serves as a cautionary tale for Brazil. Between 2017 and 2018, U.S. farmers drastically expanded soybean acreage, driven by high prices and expectations of growing demand from China. However, the trade war between the two countries and an outbreak of disease in China’s hog herds drastically reduced exports, leading to a record buildup of U.S. soybean stocks.
This scenario forced U.S. farmers to reduce soybean acreage, which has never returned to 2017 levels. The situation also highlighted the risks of over-reliance on a single market, such as China, and expanding production without considering fluctuations in global demand.
The Risks of Dependence on China
China’s economy, which fueled the growth in soybean demand over the past decades, is slowing. China’s annual GDP growth rate has been declining for nearly two decades, and this trend is expected to continue. Additionally, China’s population declined for the third consecutive year in 2024, which could reduce demand for staple foods, including soybeans.
Another concerning factor is China’s decision to reduce the proportion of soybean meal in animal feed, as part of an effort to decrease reliance on imports. These changes represent a significant challenge for Brazil, which heavily depends on exports to the Chinese market.
The Profitability Question in Brazil
Despite the challenges, Brazilian producers continue to expand soybean acreage, driven by the crop’s profitability. In 2024, the depreciation of the Brazilian real against the dollar benefited farmers, who sell their production in foreign currency. However, the recent strengthening of the Brazilian currency in 2025 could reduce this advantage, threatening the continued expansion of planted area.
Additionally, Chicago soybean futures have fallen nearly 20% since the start of 2024, reflecting concerns about global oversupply. In contrast, prices in reais have fallen only 5%, which still encourages Brazilian producers to increase production.
The Future of Soybeans in Brazil
The continued expansion of Brazil’s soybean area depends on several factors, including global demand, weather conditions, and crop profitability. While the country has benefited from growing Chinese demand over the past decades, China’s economic slowdown and changes in its agricultural policies pose significant risks.
To avoid an oversupply scenario, Brazil may need to diversify its export markets and invest in technologies that increase productivity without expanding planted area. Additionally, producers must remain attentive to currency fluctuations and international prices, which can drastically affect the sector’s profitability.
Conclusion
Brazil’s leadership in the global soybean market is a remarkable achievement, but it also brings significant challenges. Excessive reliance on China, the global economic slowdown, and changes in Chinese agricultural policies represent risks that cannot be ignored. To maintain its prominent position, Brazil will need to adopt strategies that balance production expansion with economic and environmental sustainability.
Meanwhile, producers and policymakers must learn from the U.S. experience and be prepared to adjust their strategies in response to changes in the global market. The future of soybeans in Brazil will depend not only on Chinese demand but also on the country’s ability to adapt to an increasingly complex and uncertain economic landscape.
(*) Specialist in Economics and International Affairs, Graduated with academic merit from the Faculty of Economics of the Armando Álvares Penteado University (FAAP-SP) in 2014. Postgraduate in Statistics from the Pontifical Catholic University (PUC-Chile). Editorial Consultant at Ciência Capital. International Colunist on Rádio Alta Potência. International Colunist on Rádio Agro Hoje. CEO of Business Intelligence at BlueBI Solution in São Paulo.
Instagram: @bluebisolution.
WhatsApp: +56 98484-9704
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