POINTERS: South America Soybean Production Outlook and Its Impact on the Vegetable Oils Prices

By: Mr. Marcelo Duarte Monteiro

Mr. Marcelo Duarte Monteiro holds a Masters Degree in Commerce (Agriculture) from Lincoln University (New Zealand), with First Class Honours, an MBA from Fundação Getúlio Vargas (FGV) and a bachelor’s degree in Business Administration (UFMT). Marcelo also attended an executive education program for agribusiness executives at Harvard University. Mr. Duarte Monteiro worked as an executive in one of Brazil’s largest corporations around the main regions of Brazil for five years and is the executive director of Aprosoja (Mato Grosso State Soybean and Corn Growers Association) since 2006. As part of his role at Aprosoja, he coordinates staff, manages projects and programs, takes care of member relations, and actively represents Aprosoja, dealing with government, organizations, companies, and press, both nationally and internationally. Marcelo also coordinates trade missions to Asia, USA and Europe and has spoken in international conferences in China, USA, Brazil and Argentina. Member of the Soybean Chamber of the Ministry of Agriculture (MAPA), of the COSAG - Superior Council of Agribusiness at FIESP (Industry Federation of São Paulo State), of the Ag Finance Committee of ABAG (Brazilian Agribusiness Association), of the External Advisory Board for the ADM Institute at the University of Illinois at Urbana-Champaign and former member of the Corn and Soybean Chamber of the Brazilian Mercantile Exchange (BM&F/BOVESPA).

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Brazil is currently the second largest soybean producer and exporter and responds to nearly one third of the world’s total soybean production. Brazilian soybean production is highly efficient, sustainable and occupies only 3% of the country’s territory. International specialists agree that it is just a matter of time for this South American country to become the next world leader in production and exports of this commodity. The current study aimed to analyze the key soybean production issues and scenarios for Brazil. The method used was literature review, database analyses and personal experience. The study begins identifying the characteristics and figures of soybean production in Brazil. It follows with the analyses of the key challenges and opportunities for soybean production in Brazil. Finally, forecasts for the next 10 years are shown and analyzed.

Results show that even though there are constraints and challenges, there is significant potential for soybean production increase in Brazil. However, improvements in transportation systems and legislation are necessary in order to provide incentives for farmers to increase production.

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Questions & Answers (9) :

MARCELO DUARTE MONTEIRO

12 years ago

Desmond Ng sorry for the mistakes. Santos share in soybean exports is 28% (2011) and the share of the Midwest states for 2011/12 crop was 53%, but if you include the states of SP, RO and MG as are show in the paper map, this share goes up to 60% for the last crop.

MARCELO DUARTE MONTEIRO

12 years ago

Desmond Ng, it is difficult to say. Three factores are important for second crop 1) soybean cultivars of short cycles (100 days), 2) significant machinery investment to plant and harvest quickly and 3) longer rainy seasons (from October to April)

MARCELO DUARTE MONTEIRO

12 years ago

Thank you for your point of view Msuhaili. Projected margins are currently very high for growers and there will be an excepcional increase in soybean area this season. My state alone (Mato Grosso) will grow 1 million hectares of seeded soybean area. The remaining states should grow at least another 1 million hectares.

MARCELO DUARTE MONTEIRO

12 years ago

Hi Faudzy. Even considering the significant losses in the US this season, the world should produce additional 24 MM tons of soybeans this season (4.3 MM Metric Tons equivalent of vegetable oils). As you noticed, this will not be enough to cope with the increase in world demand this year.

Desmond Ng

12 years ago

Dear Mr Monteiro, in your paper, you mentioned that one third of the soybean cultivated area participated in the second crop planting approach. May i know what is the maximum potential soybean area that could be used for second crop planting? Why?

Desmond Ng

12 years ago

Dear Mr Monteiro, referring to your paper, there is discrepancies between your text and figure 3 & 4. According to your figure 3, the santos port's export share is 23% while in your text it is 28%. At the same time, in your figure 4, i was shown that the MW share of soybean production is 61% while your text mentioned only 52%. Can you clarify this?

Msuhaili

12 years ago

My view on your forecasted seeded area in next session for soybean to increase by 10% (2.5 million hectares) which could reach 27.5 million hectares and maximum of total production at 85 million tons could not happen. This is based on previous trend where the increase of Brazil’s soybean hectarage not more than 1 million hectare accepts in the period of 2008-2009 at around 1.7 million hectares. Not to forget, El Nino is also expected to affect crops production next year in this area.

Msuhaili

12 years ago

Hi Marcelo, thank you for participating in our POINTERS program. My question is, given the current in deterioration in the production of US soy crop due to the severe weather condition , how do you see the South American planting intention for its next session planting playing a crucial role in overcoming the current supply deficit and reestablishing the balance again. I feel, even though the South American planting intention may increase, this alone will not suffice, to cater to the global demand, as increase in other producing vegetable oils must also come into play. To this end maybe the higher planting in South America and higher production of palm oil from Malaysia and Indonesia may hold the key to ensuring adequate global oils and fats supply. Hope to see you in Kuala Lumpur soon, maybe at our POTS KL event in October.

Msuhaili

12 years ago