Contemporary Oilseed Markets in Brazil
The international energy markets have experienced sharp movements during the last several weeks because of the recently negotiated agreements between OPEC and non-OPEC petroleum producers. However, it is not just the oil market that is affected by these price and demand variations. The markets of major alternative fuel sources, such as ethanol and other biofuels, are also experiencing a great amount of speculator activity. Currently, the largest producers of biofuels in the world are the United States, Brazil, the European Union, and China. Certainly, none of the aforementioned countries are part of the recent Vienna Agreement between OPEC and non-OPEC oil producers. Nevertheless, the economies and domestic markets of countries throughout the world are reacting to the challenges and opportunities forecasted for the energy sector during the upcoming years. This article explores the status of oilseeds markets in Brazil, particularly soybeans, which is one of the country’s most important crops.
Contemporary Oilseed Markets in Brazil
Oilseed crops are grown primarily for their oil content, which oscillates between 20% and 40% of the seed. The most commonly known oilseed crops are canola, sunflower, and soybeans, amongst others. When it comes to soybeans, one of the world’s largest oilseed crops, the main producers are once again the US and Brazil, closely followed by Argentina and China. However, China is by far one of the world’s largest importer and consumer of soybeans from other major producers.
The amount of land devoted to soybean cultivation in Brazil during 2014/15 was of 32.1 million hectares. This then increased to 33.3 million hectares in 2015/16 and is expected to reach 33.7 million hectares for the 2016/17 season. In terms of total soybean output, Brazil yielded some 97.2 million metric tons in 2014/15 and, the following year, about 96 million metric tons. For 2016/17, the aggregate production forecast surpasses 100 million metric tons of soybeans. Domestically, the most important states regarding soybean production are Rio Grande do Sul, Paraná, and Mato Grosso. When it comes to imports, Brazil only purchases a minimal amount of soybeans from the international market, which average 300.000 metric tons annually.
Brazil is a net exporter of soybeans towards the international markets, selling primarily to China and the EU. During 2014/15, Brazil exported a total of 54.6 million metric tons of soybeans. This amount then decreased to 52 million metric tons in 2015/16 and is expected to reach 57 million metric tons of soybeans exported for the 2016/17 year. Throughout the last several years, the EU markets have consistently purchased some 6 million metric tons worth of Brazilian soybeans on a yearly basis. In terms of domestic consumption, the amounts have ranged between 43 and 44 million metric tons annually during the last several years.
In spite of the global economic slowdown and currency fluctuations in the foreign exchange market, China remains Brazil’s most important trade partner and oilseeds are no exception. In fact, the coming months and years are expected to increase the demand for alternative fuel sources internationally. Furthermore, given Brazil’s leadership regarding the use of biofuels and China’s ever increasing demand for soybeans, this agricultural sector is bound to continue its positive growth for years to come.