US-China trade war boosts demand for Brazilian soy

The ever-increasing US-China trade war has resulted in China cutting down on American Soybeans which has provided an opportunity for Brazil to fill in the gap. Added with the stagnating sugar-market, Brazilian farmers have an incentive to now farm more soybeans.

Many Brazilian farmers are now benefiting from America’s loss. Chinese buyers are choosing Brazilian soy as a replacement for US soy, while at the same time Brazil is charging a premium price for its produce. The change in soy suppliers for China may have long term consequences for the USA in future, because even if the trade tensions calm down, that doesn’t mean China will once again choose US soy as its preferred option.

China’s demand for soy has even changed Brazil’s farming patterns, as many farmers have already harvested and replanted soybeans or prefer growing soybeans in anticipation of Chinese demand. Soy is also an instrumental crop for feeding farm animals, which therefore means as the demand for meat by China grows, so does the demand for soybeans.

In 2017 alone, Brazil supplied China with 53.8 million tons of soybeans, almost half of soybeans produced that year. With those numbers expected to increase this year to new highs because of the added demand.

China’s retaliation tariffs on the US and US farmers hasn’t swayed Donald Trump supporters. Many of these supporters are farmers hurting from the trade war, but choose to remain loyal to Trump and the Republican party at this time. This may change as soy harvest begins in October, and many American farmers are hoping trade tensions will come to a negotiated settlement by then.

Source: Reuters.com

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