Brazil features over 75 million hectares of underused pasturelands which could be turned into productive cropland. Together with the expected increase of global grain & oilseed consumption throughout the next decade, Brazil is a natural candidate for responding to this demand by increasing supply, especially of soybeans—its main export grain commodity, according to the Rabobank report ‘Build it and they will come; The impact of port expansion on Brazilian soybean production and exports’.
The outlook for the global demand for grains & oilseeds is very promising for the near future, as the dietary shift towards foods with higher protein content in developing countries (particularly China and India) materialises—driven by rising incomes and a growing middle class. Global demand for animal feed is also set to increase. This will boost grain consumption, since grain comprises over 70 percent of conventional feed ingredients.
Lacking port capacity and a history of underinvestment in port terminals has, however, remained a key bottleneck for Brazil when it comes to fully realising its grain trade potential. Yet, according to Grains & Oilseeds Analyst Renato Rasmussen at Rabobank: “Large investments being made by the private sector in port facilities in the so-called "Northern Arc" tend to motivate an increase of approximately 16 million tons of Brazilian soybean exports by 2025. As a result, Brazil’s soy area is expected to experience a drastic increase in the coming years."
Victor Ikeda, Farm Inputs Analyst at Rabobank says: “About 4 million hectares of underused pastureland should go through this conversion in the next five years. In a decade, 9 million or 10 million hectares are expected to have been turned into productive cropland. This represents outstanding opportunities not only for farm inputs companies but to the entire Brazilian agribusiness.”
Thursday July 14, 2016/ Rabobank/Netherlands.