Trump Trade War Positively Impacts Brazil’s Agribusiness, Says SLC CEO

The trade war initiated by President Trump has benefited Brazil’s agribusiness sector, according to SLC Agricola’s CEO. Brazil is positioned to supply significant soybean imports to China, while China reduces its reliance on U.S. agriculture. The ongoing situation raises questions about potential U.S.-China agreements affecting Brazil’s market position.

The trade conflict initiated by U.S. President Donald Trump has positively impacted Brazil’s agribusiness sector, as indicated by Aurelio Pavinato, CEO of SLC Agricola. During a recent conference call, he stated that Brazil’s agriculture continues to prosper and establishes itself as a reliable supplier in the global market amidst the ongoing trade tensions.

SLC Agricola, recognized as one of Brazil’s leading grain and cotton producers, is benefitting from increased demand for soybeans from China, the world’s foremost soybean importer. Pavinato noted that due to the trade war of 2018-2019, China’s dependence on U.S. soy has significantly diminished.

In response to new tariffs imposed by the U.S., China has enacted its own tariffs of 10% to 15% on American agricultural exports, including meat and soybeans. Pavinato anticipates that China will import approximately 80 million metric tons of soybeans from Brazil while importing only 21 million tons from the U.S. this fiscal year.

He remarked that this trade war is fostering an increase in Brazilian soybean prices over Chicago’s benchmark prices, with potential premiums rising by as much as 10%, correlating to the tariff rate applied by China to U.S. soy. Additionally, Pavinato observed a reduction in China’s dependency on U.S. corn and expressed confidence that Brazil could soon fulfill all of China’s cotton import requirements.

The pivotal concern moving forward is the possibility of a new negotiation between China and the U.S. regarding agricultural products. Pavinato expressed skepticism that such an agreement would occur, stressing that it might not favor Brazil if it results in heightened imports from the U.S. He mentioned, “But we don’t believe it will happen,” explaining that while a deal might exist, agriculture would not be its central focus.

In conclusion, the ongoing trade war has significantly favored Brazil’s agribusiness, particularly in soybean production, as China reduces its reliance on U.S. imports. SLC Agricola’s CEO, Aurelio Pavinato, forecasts robust demand from China and rising premiums for Brazilian soybeans. However, potential negotiations between China and the U.S. remain a critical concern, with implications for Brazil’s agricultural exports.

Original Source: money.usnews.com