Brazil strengthens its competitive position in soybean and corn production as US margins decline

Profitability in Brazil’s soybean and corn production could improve significantly in the 2026/27 season, while US farmers are expected to face a further decline in production margins. According to RaboResearch, Rabobank’s research division, operating margins for soybeans in Brazil are projected to increase from 24% to 38%, while corn margins could rise from 46% to 55%. Meanwhile, in the US, corn operating margins are expected to decline from 7% to 3%, while soybean margins could fall from 18% to 15%. These estimates are presented in the October Field Crop Margin Outlook 2027 report, which forecasts an uneven recovery in global crop production profitability.

Despite the projected improvement in margins, Brazilian producers will continue to face pressure from rising production costs. In the 2026/27 season, operating costs for soybean cultivation could increase from $866 to $899/ha, while corn production costs are expected to rise from $739 to $820/ha, or approximately 11%. The sharpest increase is projected for crop protection products used in corn production, with expenses rising by 35% from $96 to $131/ha. Fertilizer costs for corn are expected to increase by 10% to $248/ha. For soybeans, more moderate cost increases are forecast, with fertilizer expenses reaching $290/ha and crop protection costs rising to $301/ha.

Meanwhile, improving operating margins do not necessarily indicate a full recovery in the financial position of Brazilian farms. According to Rabobank, the main challenges remain high debt levels following previous investment cycles, expensive credit and limited liquidity. Agricultural loan delinquency rates have already exceeded 8%, reaching record levels. Analysts emphasize that financing costs significantly reduce farms’ actual profitability. Furthermore, the reported operating margins exclude land costs, debt servicing expenses and government subsidies, meaning they do not represent producers’ net profits.

The outlook for other major grain and oilseed producers remains mixed. In Argentina, soybean operating margins could rise from 9% to 21%, while corn margins are expected to decline from 26% to 23% due to higher input costs, particularly fertilizers. In the US, corn production is approaching the operating break-even point and could become unprofitable when all production costs are included. Meanwhile, Rabobank expects European crop production profitability to recover following a weak 2026. Assuming a normalization of yields and higher revenues, average operating margins for European producers could increase from 53% to 58%.

Rising fertilizer prices will remain one of the main risks facing the global agricultural sector in 2027. The conflict in the Middle East is keeping nitrogen fertilizer prices elevated, while restricted phosphate supplies and high sulfur prices are adding to production cost pressures. At the same time, ample global grain and oilseed supplies are limiting the potential for sustained increases in agricultural commodity prices. El Niño is creating additional uncertainty, with its effects potentially persisting through much of the first half of 2027, according to NOAA. Rabobank sees the possibility of short-term increases in agricultural commodity prices but does not expect a sustained rally sufficient to fully offset producers’ rising costs.

Tags: corn, Brazil, soybean, USA