Brazil chases Chinese business amid US-China trade war

By Niamh Michail contact

- Last updated on GMT

© GettyImages/Racide
© GettyImages/Racide

Related tags: Soy, Trade

Brazil's agri-food industry is feeling optimistic, as it stands to benefit from the escalating trade war between China and the US, by fostering closer ties with China.

A Brazilian agri-food delegation returned optimistic from a trade mission in Asia last week, reporting that the Chinese government was “very receptive​” to opening its market to Brazilian protein, fruit, grain and dairy products.

Before setting off on the trade mission to meet Chinese politicians, Tereza Cristina, Brazil's minister of agriculture, livestock and food supply, said the impasse between China and the US over foreign trade tariffs could create business opportunities for Brazil.

Cristina returned to Brazil last week and said she hoped “good results​” would come to fruition “over the next two to three months”.

The Confederation of Agriculture and Livestock of Brazil (CNA) was also part of the delegation, which also travelled to Vietnam and Indonesia.

Its vice president, Muni Lourenço, said it had made "important progress​" with the Chinese Government.

According to Americas Quarterly​,​ one of the obstacles faced by the Brazilian trade mission to China was the damage caused by the “fierce anti-China rhetoric​” of president Jair Bolsonaro and foreign minister Ernesto Araújo.

However, the CNA’s director of international relations, Gedeão Pereira, it was feeling “very optimistic about the future​”.

“China needs Brazil to grow and Brazil needs China to sell its products,” ​he said.

Short-term gains

Michael Haverty, partner at agri-food business consultancy The Andersons Centre, said he believed that Latin American producers, in Brazil and beyond, would benefit from a US-China trade war.

“Added to this, there is also an outbreak of African Swine Fever in China (and elsewhere), which is having a major impact on pig production. This means that pig meat supply is reduced and emerging evidence from industry suggests that other meats, including beef, are benefiting in terms of price.

“For soybeans, this African Swine Fever outbreak is likely to mean that less soy is used in Chinese feed mixes which could have a negative effect on soybean prices,” ​Haverty said.

According to Victor Ikeda, analyst at the Food and Agribusiness Research and Advisory department of Rabobank Brazil, both Brazilian and Argentinian soy farmers stood to benefit from a US-China trade war from a price perspective, but only in the short term.

“Given the possible impacts of the trade war in the long run to the global economy, I believe it is not interesting for the long-term potential of soy demand,” ​he told FoodNavigator-LATAM​.

Rabobank predicted China would also need to increase its corn imports in the coming years.

“We believe China will need to import 15 million tons of corn by 2021/22, once [it has destocked] and there is a limitation to expand even more its local production. But it will affect South American corn exports only if the trade war continues up to this period."

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