Brazil braces for more Chinese demand, higher food prices amid US trade war

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Sao Paulo: US President Donald Trump’s trade war with China will provide Brazilian agricultural exporters with the opportunity to participate even more in the Chinese market at the price of US farmers, but it can also boost more food inflation in Brazil.

China responded rapidly to Trump’s latest US duties this week, which included a 10 percent and 15 percent increase, including US $ 21 billion worth of US agricultural goods, including meat and soybeans.

The largest exporter of the world’s soy, cotton, beef and poultry meat is expected to be the world’s largest exporter, importers there want tariff -free imports. During Trump’s first term, the trade war with China resulted in the resulting US farmers lost a part of the market share to Brazil, including imports of China’s precious soybeans.

The United States has never regained this market share for soybeans. China continues to buy more and more agricultural imports from Brazil than before the first trade war, and will result in the latest tariff period.

“The growing tension of the US China indicates China’s maximum grain and protein from Brazil, which potentially reduces demand for commodities and increases demand and prices in Brazil,” said Sentander’s analysts.

Brazilian soybeans prices are already on the rise. The premium on local ports is at a height of a season at local ports, said Egger Invist analyst Edward Wenn.

Atao BBA analysts told clients in a note, “Any additional demand from China could result in more exports from Brazil to healthy prices.”

This will help Brazilian farm companies such as SLC Agrola and Braslagro. More exports will mean less domestic supply, however, and will increase the cost of feeding animals for local matt packers such as JBS and BRF.

Severe stress

However, the rise in food prices will be bad news for Brazilian President Louise Lola Da Silva, whose popularity has been submerged in recent months, the main cause of high food costs.

According to the statistics agency IBGE, in 2024 the total food prices increased by 8.0 %, and increased by about 1.0 percent in January, which increased in the fifth month. The February data will be released next week.

Brazil’s central bank, which is hiking at interest rates, says high meat prices are the key to a significant increase in food costs and has described the negative scenario of the short -term.

On Thursday, Vice President Geraldo Elkman and other officials met with the food industry leaders, as the government finds ways to reduce food prices.

Inflation also increased in 2018-2019, when Brazil exported more agricultural goods to China.

Brazilian consumer prices ended at 3.75 % in 2018 and at the end of next year it increased by 4.31 %.

Back toward the future

Santander noted that although Levies are less tough than the 2018 Levies, the latest prices announced by Beijing will intensify long -term diversity from US supply.

China’s Turbo charged demand will already illuminate a positive approach to the Brazilian agricultural business, which reaches the height of key goods this year at all times.

It is expected that Brazil is expected to have a record soybean crop of about 170 million metric tonnes in Brazil, with exports more than 100 million tonnes, and beef, poultry and pork industries have also predicted record production and shipment this year.

“China will try to get the most out of Brazil.”

Prime meat

Representatives of Brazilian meat makers said the change in global trade should be positive for the South American country.

“Brazil will end advantage of Brazil, especially in terms of prices and profits,” Ricardo Santin, head of the meat lobby group ABPA, told Reuters.

Shares of Brazil’s matters and grain producers were almost flat flat on Thursday after the rapid rise in the previous session.

Santin said China’s benefits from excessive exports, which are already a major Brazilian meat buyer, will probably meet the cost of the feed.