Drought knocks U.S. off its soybean pedestal

Brazil #1 soybean exporter, U.S. #2

Jack Rodolico By Jack Rodolico

Lighting strikes over a barn surrounded by a soybean crop in Donnellson, Iowa, July 13, 2012. (Reuters/Adrees Latif)

More bad news for Midwest farmers: American soy is now number two.

As The Rio Times reports, Brazil will likely surpass the U.S. as the world’s most productive soybean grower in 2012-2013. The new hierarchy comes on the heels of the worst American drought in half a century.

The U.S. Drought Monitor says that while the past few weeks have seen increased rain and cooler temperatures, a severe drought still plagues American farmers, leaving “devastated agriculture in its wake.” Last week, 83 percent of U.S. soybean fields were still gripped by drought, with 46 percent of areas experiencing “Extreme to Exceptional Drought.”

Down in rural Brazil, America’s drought issues have “created an atmosphere of euphoria in the [Brazilian] countryside,” as The Rio Times quoted Luiz Antonio Pinazza, president of the Sectorial Chamber of Agricultural Inputs.

In July, China imported more soybean from Brazil than the U.S. While this trend in Chinese imports could be reversed, Brazil may stay on top globally for years. The drought has increased global food and commodities prices, and Brazilian farmers are likely to plant more soy next year to rake in more profits.

First the soy, then the corn

The bad news (bad for the U.S., that is; good for Brazil) doesn’t stop with soy. American cattle eat a lot of corn, another crop hit hard by the drought—Brazilian corn farmers are filling the void in the U.S. market as American corn withers on the stalk.

As drought descended on the U.S., global food prices inched up six percent in July, raising fears of a widespread food crisis similar to 2008, when riots broke out from Haiti to Egypt.

“The Vatican,” reports The Rio Times, “recently joined calls for an emergency summit after a senior executive with commodities trading giant Glencore said the company stood to make good profits from the current high prices of agricultural commodities.”

Brazil’s farming success comes with the loss of record amounts of the Amazon Rainforest. Deforestation in Brazil was on the rise last year—though mostly due to cattle ranching—and it has only accelerated under President Dilma Rousseff, who has rolled back rules that inhibit deforestation.