While U.S. farmland loses acreage every year for various reasons — from subdivision to renewable energy projects — Brazil’s row crop footprint keeps growing as it gobbles up pastureland.
In fact, between the 2015-16 and 2024-25 seasons, soybean acres in Brazil ballooned from 82 million to 117 million, according to Joana Colussi, a University of Illinois ag economist. And the country still has capacity for noticeable growth.
Across Brazil, an additional 70 million acres could eventually become farmland. Of that, 12.65 million acres could be converted from degraded pastureland alone.
Livestock could get bumped
“Conversion to cropland is a more profitable alternative than the recovery of that pasture for livestock grazing,” Colussi says. “For the ranchers, it’s better to either rent or sell this land to row crop farmers.”
Also, Brazil’s per-acre yields are on the rise, says Marina Cavalcante, a Bloomberg Intelligence analyst.
“Brazil’s steady increases in yield underscore the potential for further output growth through technology,” she says. “The country’s grain production could rise 8% to 11% in the next two years, exceeding 8% area growth. A tariff scenario favors greater expansion. In 2021-23, farmers planted 6% to 8% more soybeans and corn as prices jumped more than 120% due to the pandemic.”
It’s not all upside in Brazil, Colussi points out. About 70% of Brazil’s exports go to China, making it highly dependent on a single country. Transportation logistics remain a challenge as well, with 65% of the grain relying on roads and trucks for port delivery. Storage capacity is also an issue for some farms, and crop insurance is not subsidized as it is in the U.S.
“Because of that, the risk to produce in Brazil is higher than the risk to produce here in the U.S.,” she says.
Room for expansion
About 23% of Brazil, or almost 500 million acres — roughly the equivalent of 10 “Nebraskas” — is either grassland or pasture, according to Jose Rossato Jr., a director at Coplana, a Sao Paolo-based agricultural producer. About five of those Nebraskas can be converted to row crops.
Speaking at a Barchart conference last year, Rossato noted that half of that ground is too poor to become productive farmland, and a thriving beef industry will keep many millions of additional acres in livestock production.
Brazil’s farmers aren’t immune from the same market forces buffeting their U.S. counterparts, Rossato says. Last year, Brazil’s planting expansion showed signs of easing amid indications China may be pulling back soybean purchases from Brazil, he says.
“They bought a lot of soybeans the last two, three years, so they may have a good amount in storage,” Rossato says. “Maybe they are concerned about their own economy. We don’t really know.”
Soybeans have dropped close to the breakeven point for some farmers in Brazil, Rossato says. That’s a sharp U-turn from high prices a couple years ago that prompted many to borrow money to buy expensive new tractors and combines. Today’s weaker markets may force some farmers out of the business, though he doesn’t think that means the land won’t be farmed.
The bottom line is Brazil remains poised to be a top global soybean supplier for quite some time, Colussi concludes.
“If the world will need more soybeans in the future, Brazil will be ready to offer this, because they have the land and the expertise,” she says.
3 ways to Brazil-proof a market strategy
Brazilian grain production can significantly move grain prices.
When weather favors production in South America, prices can be driven down. An “off” season, however, can push prices significantly higher.
What does that mean for how you shape your marketing plan?
Here are three ways to prime your strategy:
- Track Brazilian planting and harvest progress to anticipate possible price swings.
- Monitor U.S.-China trade relations and Brazilian export trends for additional pricing clues.
- Use futures and options to hedge against times when Brazil produces record-breaking crops.