South American countries such as Brazil and Argentina appear to have the upper hand on the U.S. in expanding soybean acreage in the future, says Don Roose, U.S. Commodities. There’s no sign Brazil’s recession is going to slow that country down, either.
“The two issues you have with South America: One, they’re using their grain as a currency, so they want to continue to produce,” Roose explains on the “AgDay” Agribusiness Update segment with guest host Tyne Morgan. “The other thing that you have is the acreage expansion just continues. So when you look at it, [contraction] is possible, but I really don’t see it. I think you’re probably going to increase acres both in Brazil and Argentina, so that’s the real issue that you have going forward.”
Meanwhile, the global marketplace will eventually send a signal soybean acres need to contract, Roose predicts, and the likely place for an acreage reduction to take place is the U.S.
“South America’s on a growth pattern, and they’re still profitable on planting both corn and soybeans,” he says. “Here in the U.S., it’s more marginal. Since the ‘60s, we’ve had a number of set-aside programs, we had the PICK program, we had the CRP program. It seems like the government comes and we reduce acres. Right now, the government is the largest rent-payer in the U.S.”
Click the play button below to watch the complete “AgDay” interview with Roose.