One country that could indirectly benefit from the intensifying
US-China trade war is Brazil, which finds itself in a strategic position
to increase its market share of soybean exports to China.
US-China trade war is Brazil, which finds itself in a strategic position
to increase its market share of soybean exports to China.
China is expected to import 100 million mt of soybeans this year, up
from 95 million mt in 2017. The US accounted for 33 million mt, or just
over a third, of the 2017 total.
from 95 million mt in 2017. The US accounted for 33 million mt, or just
over a third, of the 2017 total.
S&P Global Platts news feature: China-US trade war
With US soybeans now in line for a 25% tariff, Chinese buyers are
likely to shift their interest to the South American region, which
accounts for nearly half of global soybean production.
likely to shift their interest to the South American region, which
accounts for nearly half of global soybean production.
The latest estimate for the 2017-2018 Brazilian soybean crop is up to
119 million mt, compared to last year’s harvest of 114 million mt. Of
this 51 million mt was exported to China, up 33% up from 2016, according
to US Department of Agriculture data.
119 million mt, compared to last year’s harvest of 114 million mt. Of
this 51 million mt was exported to China, up 33% up from 2016, according
to US Department of Agriculture data.
The other major South Americn producer, Argentina, is not in much of a
position to offer competition this year. Soybean production there has
been hammered by poor weather conditions that mean its crop is expected
to be the lowest in a decade.
position to offer competition this year. Soybean production there has
been hammered by poor weather conditions that mean its crop is expected
to be the lowest in a decade.
This leaves the field open to Brazil as the main supplier of soybeans
and at more competitive prices than the other options available on the
market.
and at more competitive prices than the other options available on the
market.
Meanwhile, the weakness of the Brazilian currency enhances farmers’
margins when compared with the more expensive US grains that, despite
the drop in prices caused by the US-China trade dispute, are still not
as attractive.
margins when compared with the more expensive US grains that, despite
the drop in prices caused by the US-China trade dispute, are still not
as attractive.
There are however question marks over how quickly Brazil will be able
to react to the new trading situation in the aftermath of a truckers
strike protesting high fuel costs that halted transport of cargoes to
ports for more than two weeks.
to react to the new trading situation in the aftermath of a truckers
strike protesting high fuel costs that halted transport of cargoes to
ports for more than two weeks.
Shipping sources said that regular loadings of cargoes at most ports
weren’t impacted in the short term as the grains being sold were old
crops stored in silos located near the port facilities.
weren’t impacted in the short term as the grains being sold were old
crops stored in silos located near the port facilities.
“We are not sure what will happen if we see another strike,” said one
shipping source, adding that it is unclear how much volume is left in
storage.
shipping source, adding that it is unclear how much volume is left in
storage.
“If they don’t sort out the internal issue they have with the truck
drivers this will set back the sales which are already behind from last
year,” the source added
drivers this will set back the sales which are already behind from last
year,” the source added
