In Sao Paulo on March 6, U.S. President's trade war with China could boost Brazilian agricultural exports to China at the expense of American farmers, potentially worsening food inflation in Brazil.
China retaliated with new tariffs following U.S. duties, affecting $21 billion in American agricultural goods like meat and soybeans. Brazil, a major exporter of soy, cotton, beef, and chicken, is poised to benefit as Chinese importers look for tariff-free options.
As tensions rise between the U.S. and China, analysts predict a shift towards Brazilian agricultural products, impacting prices in both countries. The increasing demand from China may lead to higher prices in Brazil, supporting companies like SLC Agricola and BrasilAgro but raising costs for local meatpackers.
While a surge in food prices could pose challenges for President Luiz Inacio Lula da Silva, Brazil’s central bank is on alert due to rising meat prices. Officials are discussing strategies to stabilize the food industry.
Food and beverage prices in Brazil have been steadily climbing, with inflation peaking in recent years. The latest tariffs from Beijing are seen as a push for diversification away from U.S. supplies toward a more positive outlook for Brazil’s agribusiness.
Brazil looks set for record soybean and pork production, with forecasts indicating strong exports to meet China’s demands. Brazilian meat producers are optimistic about the global trade shift, anticipating improved prices and profitability.
Shares of Brazilian meatpackers and grain producers held steady after an initial boost from the news. The potential gains from increased exports to China may outweigh any rises in feed costs, according to industry representatives.