Study compares U.S., Brazil soybean complex

WASHINGTON — Brazil’s record high soybean production, depreciating currency and an expected boost in exporting capabilities through expanding transportation infrastructure will have important implications for U.S. international agricultural markets.

The U.S. Department of Agriculture Economic Research Service issued a report last month on soybean production, marketing costs and export competitiveness in Brazil and the United States.

The United States was the world’s largest soybean exporter until the 2012-2013 marketing year when Brazil exported more soybeans than the United States. Since then, Brazil’s share of the global soybean trade has increased.

“Projections indicate that the Brazilian share of global soybean trade could increase from 51.6% to 60.6% between marketing years 2021-2022 and 2032-2033. Soybeans are Brazil’s main agricultural commodity export by volume, and the country exports more than 60% of the soybeans it grows,” the report stated.

“The international market is of great importance to the U.S. agricultural economy, with soybean exports accounting for 48% of total production.

“Brazil and the U.S. are major export competitors; thus, a comparison of their production costs will help infer how changes to factors underlying production, marketing costs and infrastructure affect their export competitiveness.”

Many aspects of the international trade dynamics of the soybean sector are rapidly changing. Some of these include changes in global demand, local currency fluctuations, transportation costs and input availability.

Brazil’s recent expansion of soybean shipments during September to December and recent disruptions to fertilizer imports that were exacerbated by Russia’s war against Ukraine also play a role.

Findings of the study describe many of the factors that affect production, marketing costs and export competitiveness of the world’s leading soybean exporters — the United States and Brazil.

The study compares the differences between farm-level production costs and returns for soybeans in the United States and Brazil from 2017-2018 through 2021-2022 for the most productive growing regions in each country.

With respect to production costs, returns and competitiveness, the study finds:

• Costs of production differed between the United States and Brazil, partially reflecting Brazil’s greater reliance on custom services to provide equipment and labor for crop field operations as opposed to farm ownership of machinery in the United States. Land costs were also higher in the United States.

• Overall, allocated overhead costs — hired labor, opportunity cost of unpaid labor, capital recovery of machinery and equipment, opportunity cost of land, taxes and insurance, general farm overhead — were lower in Brazil at $155.12 per acre than in the United States at $337.72.

• Total costs per bushel of soybeans in the United States exceeded total costs per bushel of soybeans in Brazil in 2021-2022 by a $9.85 to $8.67 margin. The U.S. heartland average was $9.18 per bushel.

• Average national farm-level production costs per acre for soybeans in Brazil at $425.97 were 19.9% below the United States at $531.67 in 2021-2022, largely because of lower land and capital costs. The United States had higher yields per acre than Brazil in the regions included in the study, particularly in the U.S. heartland region, which helped offset the higher per acre costs.

• Brazilian producers had higher national average returns per bushel over total costs than the United States in 2021-2022, $4.05 compared with $2.13.

• The U.S. heartland was the lowest-cost exporter of soybeans to Shanghai, China, at $463 per metric ton. Paraná in Brazil was the next lowest-cost exporter to China, at $469 per ton, primarily due to its location close to a port and low internal transport costs. The Brazilian state of Mato Grosso is competitive with the United States in the export of soybeans at $487 per metric ton to China from its traditional Santos port in the southern region despite higher inland transport costs due to lower soybean costs of production. Export costs to Shanghai via Brazil’s Santarém port from northern Mato Grosso is $462 per metric ton.

• Improvements in Brazil’s overland transportation infrastructure over the past decade resulted in cost savings per metric ton for exporting soybeans from the main producing state, Mato Grosso, through southern ports. Average inland transport costs in 2017-2018 through 2021-2022 decreased to $77 per metric ton, compared with $98 per metric ton in 2008-2009 to 2012-2013.

• Overland transportation improvements in central Brazil to provide access to the northern ports lowered truck rates, resulting in cost savings of $28 per metric ton, further improving Brazil’s Mato Grosso’s competitive position.

Study Methodology

To assess the relative competitiveness of Brazil and the United States in the global export market, this study compares farm-level production costs, as well as the cost of internal transportation and shipping costs, to a common export destination, Shanghai in China. Soybean production costs are estimated on the costs per planted acre and the costs per bushel. The soybean cost accounts are divided into operating costs and allocated overhead costs.

Costs are compared at the national and regional levels for the most productive soybean growing region in each country: the U.S. heartland and Brazil’s Mato Grosso state, the largest soybean producer in Brazil since 2000.

For Brazil, the State of Paraná is also included to evaluate inland transportation costs for soybeans exported through southern ports.

To make the comparison less sensitive to annual price and yield variations, per-bushel costs and returns are compared using five-year average prices and yields.

Brazil’s cost structures were converted to U.S. dollars using yearly changes of real, adjusted for inflation, exchange rates.

USDA ERS commodity costs and returns data was used for this study. Costs reflect those incurred through harvest and the prices are the harvest month price received for that marketing year.

The heartland region comprises parts or all of Illinois, Indiana, Iowa, Kentucky, Minnesota, Missouri, Nebraska, Ohio and South Dakota.

The five-year average cost per bushel is based on production costs for 2021-2022 and average yields and prices for 2017-2018 through 2021-2022.