FAO and OECD foresee a slowdown in soybeans in Latin America

Production growth will be 2.8% in the next decade, compared to 6.9% in the two previous decades

Machine harvesting soybean harvest in Brazil

Threshing machine harvesting Soy in Brazil / Pixabay

Reuters | Thomson Reuters Foundation

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Soybean production in Latin America, about half of the world's supply, will slow in the next decade, according to a report by a UN agency and the OECD published on Monday, due to the lower rate of expansion of Chinese demand for grinding.

Leer en español: ¿Fin del boom? FAO y OCDE prevén una desaceleración de la siembra soja en Latinoamérica

The report of the United Nations Food and Agriculture Organization (FAO) and the Organization for Economic Co-operation and Development (OECD) indicated that production growth will be 2.8% in the next decade, compared to the 6.9% of the previous two decades.

From 1995-97 to 2016-18, the production of soybean had an explosive growth and jumped 300% in Argentina, Brazil and Paraguay -which represent 96.6% of the total production of Latin America-, in largely due to an expansion of the planted areas, the report said.

"The production of soybeans will continue growing in the next decade, and a greater use of land is projected for the cultivation of soybean at the expense of the pastures, although a third of the increase in the harvested area will come from the double crop," the report says.

In the 2019/20 campaign, the production of soybeans from the countries of Latin America would represent 52.4% of the total of the 355.4 million tons of grain that will be harvested in the world, said the United States Department of Agriculture (USDA) in a June report.

Regarding the exports of the 2019/20 cycle, the Latin American shipments would represent 58.4% of the total 151.1 million tons of grain that will be exported, according to the US agency.

Most of the oilseed is sold to China, the largest buyer in the world, which according to the USDA, would import 57.7% of the total soy sold in the world in the 2019/2020 season.

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The FAO OECD report said that it expects the expansion in soybean trade to slow down considerably during the next decade compared to the previous period.

"This development is directly linked to a lower growth projected for the grinding of soybeans in China," the report said.

Regarding general agricultural production, the FAO OECD report estimates that agricultural production in Latin America and the Caribbean will continue to grow and that the region will provide 25% of the world's agricultural and fishing exports by 2028, against the current 23% percent.

But the decline in domestic and international demand may contribute to a slower pace of growth.

"It is expected that the growth of cereal production will decrease in the next decade, with annual growth rates of around half of those observed in the last two decades for the main cereal producing countries," FAO said in a statement. .

According to the report, it is expected that by 2028, Latin America will produce 233.5 million tons of corn (18% of the world total) and 37.3 million tons of wheat (11% of the world total).