Brazil is projected to replace the U.S this year as the world’s top soybean grower. Joined by Argentina and Paraguay, these South American countries are projected to provide over half the global soybean supply next year. The price of soy, which is used for animal feed and fuel, is also expected to remain high because of a lower supply due to droughts in South America last year, and in the U.S. this year.
Droughts are currently destroying soy crops throughout the U.S, while South American farmers are predicting strong crops and abundant rains because of El Niño. This weather phenomenon warms waters in the equatorial Pacific and usually leads to heavy rainfall in the Southern Cone.
Due to such predictions, farmers in Brazil, Paraguay, and Argentina are all expected to shift away from corn production and produce record amounts of soy. After a very successful winter corn crop, Brazilian farmers are prepared to dedicate this season to soy production. Argentine farmers are expected to plant about 20 million hectares, 1 million more than in the previous season, and Paraguayan production is predicted to reach a high mark of 8.1 million tons, according to Market Watch.
Meanwhile, in the U.S., experts have categorized the present drought as the worst since 1956 and expect very low corn and soybean production, as the global prices for both commodities increase due to tight supply, according to Reuters. Although some climatologists have suggested that El Niño won’t produce as much rain as expected in the soybean-producing South American countries, the current drought in the U.S. and the rising prices are making way for large-scale, record quantities of soy production in Brazil, Argentina, and Paraguay.