Heavy rains and floods in the Midwest will cut the U.S. soybean harvest by 3 percent and push the farm-gate price to a record $12.75 a bushel, $2.60 more than the 2007 crop, reports Reuters.

This is good news for Brazil.

Brazil is the world’s largest exporter of soybeans. It is also fast becoming the world’s agriculture superpower, says Tom Dyson in DailyWealth. But Brazil’s soy business is heavily reliant on fertilizer - and this opens up a huge profit play…

The Brazilian soybean machine is incredible. In America, there’s only one soybean harvest per year. In Brazil, some farmers can get three harvests per year.

The world’s largest agricultural firms all have operations in Brazil’s soybean complex. I saw operations owned by Archer Daniels Midland, Bunge, Monsanto, Syngenta, John Deere, and many others. Parades of soybean trucks clog up the towns and destroy the highways.

It’s no exaggeration to say Brazil is becoming the world’s agriculture superpower. The soybean is just one of Brazil’s crops. Brazil is also the world’s largest exporter of sugar cane, coffee, tropical fruits, and frozen concentrated orange juice. And it has the world’s largest commercial cattle herd. It’s also one of the world’s top producers of corn, cotton, cocoa, tobacco, and forest products.

Here’s the thing: Brazil’s soybean region has terrible soil. If you planted corn in one of the soybean fields around Lucas do Rio Verde, it would rise about six inches and then stop growing.

Brazilians call the land where they grow soybeans “cerrado.” Cerrado means “closed” or “inaccessible” in English. It’s like savannah… Or the desert.

Rain is the reason. There’s so much rain, farmers pray for dry weather at harvest time. Rain turns the roads into mud, and they can’t move the combines around. And for thousands of years, the rain has leached all the nutrients from the soil.

How does Brazil grow soybeans in such poor soil? First, farmers use a special strain of soybeans. Second, they dump piles of fertilizer on their fields.

So nothing grows without huge applications of fertilizer and chemicals. This is why the soybeans I ate tasted so bitter.

(As an aside, this is a major benefit of the genetically modified crops we grow in the U.S. Farmers use much less pesticide and chemicals to grow them.)

There’s a major investment opportunity here. Brazil has more unused arable land than all the cropland in the U.S. As the farmers clear the cerrado and plant more soybeans, fertilizer companies will make huge profits.

One opportunity to consider is Bunge (BG). This American company is the largest fertilizer manufacturer in Brazil. Brazilian oil giant Petrobras (PBR) also has a fertilizer division. And Fosfertil (FFTL4 on the Sao Paulo stock exchange) is the largest Brazilian fertilizer producer.

P.S. My favorite Brazilian fertilizer play is in Africa. I recently recommended this company to readers of International Strategist. It owns a huge potash deposit just across the Atlantic Ocean from Sao Paulo.

With potash prices close to $1,000 per ton and increasing shipping rates, this company stands to make a fortune… To learn more about International Strategist, click here.

Source: A Visit to the World’s Next Agricultural Superpower