The trade war under Trump has positively impacted Brazil’s agribusiness, particularly soy and cotton exports to China. SLC Agricola’s CEO cites reduced U.S. dependence by China as a primary factor, predicting increased Brazilian soybean imports and premiums over U.S. prices. Future agreements between China and the U.S. could alter this dynamic.

The trade war initiated by former U.S. President Donald Trump has inadvertently favored Brazil’s agricultural sector, according to Aurelio Pavinato, CEO of agribusiness company SLC Agricola. In a recent analysts’ call, Pavinato noted that Brazil has emerged as a secure food supplier amidst rising global demand, especially from China, which has significantly reduced its dependency on U.S. soy since the previous trade conflict in 2018-2019.

SLC Agricola, one of Brazil’s largest producers of grain and cotton, anticipates that China will import approximately 80 million metric tons of soybeans from Brazil compared to only 21 million tons from the United States in the current year. The CEO highlighted that the ongoing trade tensions have led to increased premiums for Brazilian soybeans above Chicago benchmark prices, with potential rises matching the tariffs imposed by China on U.S. soy.

Furthermore, Pavinato indicated that China’s reduced reliance on U.S. corn means Brazil could soon meet all of China’s cotton import needs. However, he noted the uncertainty surrounding a potential new agricultural trade agreement between China and the U.S., predicting that the focus would likely shift from agricultural products to geopolitical concerns in any future negotiations. Pavinato expressed skepticism about the likelihood of an agreement similar to those seen previously, suggesting it may not favor Brazilian exports.

In summary, the trade war initiated by the Trump administration has provided significant advantages to Brazil’s agribusiness sector, particularly in soybean and cotton exports to China. The reduction of U.S. imports by China has opened up opportunities for Brazil, with expectations of increased soybean imports. Nevertheless, uncertainties regarding future trade agreements between China and the U.S. remain, potentially impacting Brazil’s position in the global agricultural market.

Original Source: www.marketscreener.com

Related posts:

Brazil Mulls Ethanol Import Tax Reduction to Address Inflation and U.S. Relations Brazil Considers Reducing Ethanol Import Taxes to Align with U.S. Trade Policies Impact of U.S.-China Trade Tensions on Brazilian Agribusiness Exports Brazilian Agriculture Faces New Opportunities Amid U.S.-China Trade Conflict