GRAIN LEGUME ROTATIONS underpin the sustainability of the Australian sugarcane farming system, offering a number of soil health and environmental benefits. Recent studies have highlighted the potential for these breaks to exacerbate nitrous oxide (N2O) emissions. An experiment was implemented in 2012 to evaluate the impact of two fallow management options (bare fallow and soybean break crop) and different soybean residue management practices on N2O emissions and sugarcane productivity. The bare fallow plots were conventionally tilled, whereas the soybean treatments were either tilled, not tilled, residue sprayed with nitrification inhibitor (DMPP) prior to tillage or had a triticale ‘catch crop’ sown between the soybean and sugarcane crops. The fallow plots received either no nitrogen (N0) or fully fertilised (N145) whereas the soybean treatments received 25 kg N/ha at planting only. The Fallow N145 treatment yielded 8% more cane than the soybean tilled treatment. However there was no statistical difference in sugar productivity. Cane yield was correlated with stalk number that was correlated to soil mineral nitrogen status in January. There was only 30% more N/ha in the aboveground biomass between the Fallow N145 and the Fallow N0 treatment; highlighting poor fertiliser nitrogen use efficiency. Supplying adequate nitrogen to meet productivity requirements without causing environmental harm remains a challenge for the Australian sugar industry. The soybean direct drill treatment significantly reduced N2O emissions and produced similar yields and profitability to the soybean tilled treatment (outlined in a companion paper by Wang et.al. in these proceedings). Furthermore, this study has highlighted that the soybean direct drill technique provides an opportunity to enable grain legume cropping in the sugarcane farming system to capture all of the soil health/environmental benefits without exacerbating N2O emissions from Australian sugarcane soils.