Brazil Makes Hay out of US-China Soybean Spat

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Brazil’s soybean exporters are looking to become the biggest beneficiaries from the US-China trade war. Following China’s retaliatory tariffs on imports of US soybeans, Brazil’s own exports of the oilseeds are up 20 percent year-on-year to $25.72 billion by value while US sales have declined sharply. Between January and August of this year, China imported 50.9 million tonnes of Brazilian soybeans, accounting for 42.7 percent of Brazil’s 2017/18 production.

Despite rising international prices, Brazil is struggling to increase processing volumes to feed China’s appetite for soybeans. Brazil’s end stocks dropped from 638,000 million tonnes to 434,000 million tonnes in August, signaling that they may be forced to import from the US to meet the huge export demand. Some Brazilian analysts expect the country to import 1 million tonnes of soybeans from the US in the current market year.

How the Brazil-China soybean trade plays out is dependent on Brazil’s forthcoming weather and how the Brazilian government works to eliminate the structural bottlenecks that impede its production capacities. So far, the weather is looking good and soybean planting in Parana state is up 8 percentage points, to 9 percent of total expected planting area, from last week. With Gro Intelligence, users can keep up with soybean trade by monitoring export volumes and growing conditions.

China is by far the biggest importer of Brazilian soybeans, with the EU a distant second (left chart above). Soybean export volumes from Brazil and the United States have risen sharply in recent years, with Brazil overtaking the US since 2017 (right chart).

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