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Soybean and cattle farming to blame for Amazon rainforest fires

Image: Flickr/Chris Collins

The United States is in a trade war with China, which began with tariffs that drove China to retaliate. The U.S. and China attempted to come to a trade agreement; however little has come from it. As a result, they have been seeking and using substitutes to the other nation’s goods. 

China has threatened the halt of U.S. agricultural imports, which generated a lot of talk around soybeans. The FreightWaves SONAR chart below shows the digital momentum of soybeans (SIGNAL.SOYBEAN). The end of July and all of August saw an increase in discussions and media attention surrounding it because of the growing tensions between the U.S. and China.

SONAR: SIGNAL.SOYBEAN

According to the Association of American Railroads, 47 percent of U.S.-grown soybeans are exported. Until the trade war, the largest importer of U.S. soybeans was China. However, this dynamic is changing.


The slowdown of U.S. agricultural exports to China is shifting the soybean market. Brazilian cattle and soybean farmers are expanding operations to capitalize on growing tensions between the U.S. and China. Brazil is expected to surpass the U.S. in soybean production this year, especially with the trade war amplifying demand for Brazilian soybeans.  

Brazilian farmers set fire to portions of the Amazon rainforest near their farms earlier this month. These fires were initially reported to be a result of climate change; however, like most fires that occur in the Amazon, they were man-made. 

The fires are typically set during the dry season to spread across more land and last longer. These fires are used to permanently clear land, making it uninhabitable and easier to add to  existing farms. Now, more than ever, there is a need, from the perspective of the Brazilian farmers to clear land. 

The farmers have a higher earning potential by increasing the sizes of their farms as the Chinese shift away from U.S. agricultural products. Currently, nothing exists to disincentivize Brazilian farmers from taking more land by burning it. Brazil’s environmental police forces, which enforce policies preventing deforestation in the Amazon rainforest, were defunded, making response times longer and ineffective. 


The United States, as well as other countries, have tried to send aid money to help fight the fires, and the U.S. even mobilized a 747 Supertanker. Brazil’s president, Jair Bolsonaro, refused the tanker and initially refused to accept any aid to extinguish the fires in the Amazon. He has since walked back his refusal and is accepting aid contingent on if he can control where the funds go. 

However, countries that surround Brazil, which are being impacted by the fires in the Amazon, are also receiving aid. The U.S. sent a 747 Supertanker to fight the fires in Bolivia.

The FreightWaves SONAR chart below compares the rail movement of grain (RTOGR.USA), which includes soybeans, and soybean inventory (SBNINV.USA). Currently, there is a surge in soybean movement, making room in storage for the next harvest. From the previous year, there was an 86 percent increase in carloads, but rail movement of soybeans is expected to decrease. 

SONAR: RTOGR.USA, SBNINV.USA

Tariffs have impacted more than just soybeans. The tariffs are changing shipping rates and movement of farm products to ports. Lower levels of  product needs to be moved to be exported, and crops that were harvested will go into storage. Should the trade war continue, freight movement of farm products will continue to decrease. U.S. farming operations, whose primary export market for a number of years has been China, will have to find new customers to survive.