Brazil-China Soybean Trade - The Nature Conservancy

PART 2PROJECTIONS OF BRAZIL-CHINA SOYBEAN TRADE TO 2020PART 3STRATEGIC IMPLICATIONS FOR CONSERVATIONMetric Tons, in thousandsVery Pessimistic Scenario: Projected Chinese soybean import demand decreases5% and 100% of that loss is assumed by reduced Brazilian soybean exports to China60.00050.00040.00030.00020.00010.000-96/9797/9898/9999/0000/0101/0202/0303/0404/0505/0606/0707/0808/0909/1010/1111/1212/1313/1414/1515/1616/1717/1818/1919/20Pessimistic Chinesetotal demand forsoybean imports(USDA/FAPRIAverage - 5%)Very PessimisticBrazil soybeanexports to China(Business as Usualminus all of Chinas’s5% reduction insoybean importdemand)1. The expansion in area planted to soy to meet Chinese demandover the next decade will happen mainly in Mato Grosso, but caneasily be met by intensifying livestock production and expandinginto cleared pastureProjections from Brazilian Ministry of Agriculture indicate that Brazil’s total crop area under cultivationwill increase from a little over 60 million hectares in 2010 to 69.7 million hectares by 2020. Of this 9.7million total hectare increase, Brazil is projected to increase area under soybean production by between 4 to5 million new hectares over the next decade, from 22.5 million to approximately 27 million hectares [17, 18],with a nearly 2.5 million hectare increase in Mato Grosso alone [18]. While current yield is at 2.83 metrictons per hectare, technological advances should result in progressive increased productivity over the next 10years, pushing yield to 3.05 metric tons per hectare by 2020 [17].Using the rate of 3.05 metric tons per hectare, we can calculate the area under soybean production destinedfor export to China in the five scenarios discussed above:Brazil soybean production: total area harvested, area harvested destined for exportmarkets, and 5 scenarios for area harvested destined for export to ChinaFigure 17On the positive side, even in the business worse than usual, we still see growth in quantity of Braziliansoybean exports to China, but it is certainly at a lower rate.Hectares, in thousands30.00025.00020.00015.00010.0005.000Total area ofsoybeans harvestedArea destined forexport (total)Very OptmisticOptmisticBusiness as UsualPessimisticVery Pessimistic096/9797/9898/9999/0000/0101/0202/0303/0404/0505/0606/0707/0808/0909/1010/1111/1212/1313/1414/1515/1616/1717/1818/1919/20Figure 18: The chart shows that by 2020, of the approximately 27 million hectares of soybeans harvested inBrazil, 36 - 43% (9.8 – 11.7 million hectares) will be destined for China.All three sources (USDA, FAPRI and MAPA) of production, import and export projections indicate greatincreases in Brazil’s total soybean exports, by approximately 35%, from nearly 30 million metric tons to nearly40 million metric tons by the 2019/2020 crop marketing year. The same projections indicate large increasesin China’s soybean imports, by approximately 18 million metric tons. In our most optimistic of scenarios,Brazil’s soybean exports to China will reach 35.6 million metric tons (~90% of Brazil’s total soybean exports).In our best-guess Business As Usual scenario, Brazil’s soybean exports to China will reach 32.9 million metrictons, or 83% of Brazil’s total soybean exports, and in the Very Pessimistic scenario, we still expect to seeBrazil’s exports to China increasing to 29.9 million metric tons, or 76% of Brazil’s total soybean exports (seefigure 19).24 25