Brazilian farmers kept pushing ahead with soybean expansion even as they grapple with a credit crunch and shrinking profit margins. The country’s soy area is expected to grow between 2% and 4% in the 2025/26 season — a pace some analysts describe as surprising given the tough backdrop.
“A 2% increase is small for what Brazil is used to. But given the situation we’re in, expanding by 1 million hectares is quite significant — and, in a way, surprising,” said André Pessôa, CEO of Agroconsult, citing the firm’s estimates. Agroconsult sees soybean area reaching 48.8 million hectares this season.
Most of the expansion is taking place in new agricultural frontiers on degraded pastureland, and could help Brazil — the world’s largest producer and exporter — harvest a record crop. Analysts and the national supply agency Conab currently peg output at 178 million tons.
AgRural analyst Daniele Siqueira also called the acreage increase “surprising.” “It kept rising in recent surveys over the past few months. Maybe growers are hoping for better prices ahead,” she said. AgRural estimates plantings at 49.1 million hectares, roughly in line with Conab.
Different Realities
A typical farmer in Brazil’s Cerrado region carries debt equal to about 2.5 times Ebitda within the financial system, Pessôa said, citing an Agroconsult study. “It’s not disastrous — it’s an acceptable average. But it masks a wide disparity,” he said. Some producers are leveraged at seven to eight times Ebitda.
In Rio Grande do Sul, a major producing state, farmers are less capitalized, and banks have become more selective after consecutive weather-driven crop losses. In Mato Grosso, the top grower, producers are in better shape after last season’s record harvest.
These differences in leverage help explain why Brazil’s soy area continues to expand even in a challenging environment.
“Headlines tend to spotlight the credit issue, which gives the impression that financial restrictions are widespread. But we see a sizable group of farmers in a very strong financial position — and they are the ones expanding,” said Marcos Rubin, founder of Veeries.
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These are the growers who avoided excesses during the years of bumper crops, high prices and abundant credit, unlike others who invested heavily and are now struggling to service debt in a high interest-rate environment.
“There are extremes in the market,” Rubin said. “Some producers really do have tight margins and credit problems, especially because they overinvested and in some cases had crop failures. And there’s another group that grew little, invested little, saved the profits from previous good soybean years — and are financially healthy. Those producers are still expanding.”
Falling Margins
With rising production costs and lower prices in Brazil, soybean profit margins are set to fall in 2025/26 — a trend that would typically curb acreage expansion. According to Itaú BBA’s agribusiness consultancy, margins will slip from 45% last season to 33%.
Even so, results are seen as positive. “Soy and corn margins are reasonable and sufficient to support these investments [in area expansion],” Rubin said, referring to financially stronger growers. Veeries estimates soybean margins at about 35% in 2025/26.
Pessôa notes another factor at play: well-capitalized farmers may be seeking returns from land appreciation, not just agricultural output. “Especially in frontier areas, the decision isn’t only about farming operations but also real estate — the expectation that an asset will gain value once developed,” he said.
December Rains
With roughly 90% of the soybean planting complete, the next two months will be crucial for determining the size of the Brazilian crop. So far, rainfall has been highly irregular, with dry pockets in Goiás, Mato Grosso, Mato Grosso do Sul and Minas Gerais raising concerns.
“The maximum yield potential may no longer be achievable in Goiás and parts of Mato Grosso. But we have solid data showing very low correlation between October–November rainfall and final yields in the Cerrado. If December weather is favorable, both states can still produce a very good crop,” Siqueira said.
In southern Brazil, the main concern is related on La Niña, which tends to reduce rainfall. Inmet, the national weather agency, expects below-average precipitation across the South in December. For the Center-West region, Inmet forecasts above-average rainfall this month, which should aid crop development.
