The trade conflict instigated by President Trump is advantageous for Brazil’s agricultural sector, as highlighted by SLC Agricola’s CEO, Aurelio Pavinato. Brazil anticipates strong soybean demand from China, potentially reducing U.S. imports significantly. This shift could result in increased prices for Brazilian soybeans and cotton amidst ongoing geopolitical tensions.
The trade war initiated by U.S. President Donald Trump is reportedly beneficial to Brazil’s agribusiness sector, according to Aurelio Pavinato, the CEO of SLC Agricola. In a recent call with analysts regarding the company’s fourth-quarter results, Pavinato stated, “The trade war continues to benefit Brazilian agriculture, and Brazil as a secure supplier for customers who demand food.” SLC Agricola is recognized as one of Brazil’s largest producers of grain and cotton.
Pavinato highlighted that Brazil stands to gain from increased demand from China, the world’s largest soy importer, as its dependence on U.S. soy has significantly diminished since the 2018-2019 trade conflict. Following newly announced U.S. tariffs, China promptly retaliated, enacting 10% and 15% tariff increases on approximately $21 billion of American agricultural goods, including soybeans and meat.
For this year, Pavinato projected that China would import 80 million metric tons of soybeans from Brazil, compared to only 21 million tons from the U.S. He noted that Brazil’s soybean prices are benefiting from the trade war, with premiums over Chicago benchmark prices potentially increasing by 10%, matching the tariffs imposed by China on U.S. soybeans. Furthermore, he indicated that Brazil is on course to satisfy all of China’s cotton import requirements as the Asian nation continues reducing its reliance on U.S. corn.
Looking ahead, Pavinato raised speculation about whether a new trade agreement between China and the U.S. regarding agricultural goods will emerge, as seen in the earlier trade war. However, he expressed doubt about the likelihood of such a deal benefiting Brazil, as it could result in China increasing U.S. imports. “But we don’t believe it will happen,” Pavinato remarked, emphasizing that any future trade agreements might be more influenced by geopolitical factors rather than economic ones.
In summary, the ongoing trade war involving the United States and China has positioned Brazil positively within the global agricultural market. Increased demand from China for Brazilian soybeans and cotton, alongside reduced dependency on U.S. products, highlights the strategic advantages for Brazilian agribusiness. Future negotiations between China and the U.S. remain uncertain, with possible implications for Brazil’s export landscape.
Original Source: money.usnews.com
