An ever-growing productionThe oilseed is by far the most important crop cultivated in Brazil, accounting for more than one third of the national agricultural production value. In one decade, the area planted with soybean in the Latin American country increased by nearly 60 percent, and was estimated at more than 38 million hectares in crop year 2020/21. Production is the highest in the Central-West region, in particular the state of Mato Grosso. Nevertheless, the expansion in Brazilian soybean production comes with increasing environmental concerns, as the need for arable land leads to deforestation, especially in the Amazon region.
International and domestic demand on a riseIn addition to its leading position in production, Brazil also ranks as the largest exporter of soybean worldwide. Exports are closely related to the demand in China, by far the most important country of destination for Brazilian soybean exports. For example, exports of soybean from Brazil to the Asian country reached record highs in 2018, as trade wars between the United States and China intensified, leading to the enforcing of a tariff on the North American country’s soybean. The higher cost of U.S. soybeans caused the Chinese market to raise its imports from Brazil.
Along with the foreign market, a rising domestic consumption has also contributed to the growth in soybean cultivation in Brazil. The industrial sector's consumption of soybean oil has consistently increased in the past decade, mainly a result of its use as the main feedstock for biodiesel production. With the mandated biodiesel blend rate for commercialized diesel fuel in Brazil being raised to 12 percent in 2020, the increasing demand for soybean oil in the Brazilian fuel sector can be expected to continue.