Brazil is pushing the US out of world’s biggest soybean market
soybean market is dominated by one major buyer: China. For years, Brazil has taken an increasingly bigger share of that trade away from the US. Now, South America’s shippers are even starting to dominate during the typical season lull.
Chinese buyers are snapping up Brazilian soybeans for delivery in October, a time of year when US exports are typically at their peak, according to people familiar with the trades. More deals for the fourth quarter are still likely to be done, according to people, who asked not to be identified because the deals are private. The sales come as Brazil is reaping a record crop and offering much lower prices than rival producers.
They also reflect President Luiz Inacio Lula da Silva’s plan to seek closer ties with China as part of his growth plan for Latin America’s largest economy. “We still have competitive premiums for at least another month or so,” Thiago Milani, head of trading and origination for 3Tentos, a family-owned agribusiness company in Brazil, said referring to the country’s shipping prices. American farmers are losing their competitive edge in the global agriculture markets as Brazilian production expands.
Geopolitical tensions have also prompted China to seek deeper ties with the South American nation and reduce its historical reliance on the US. Lula’s plan to deepen relations with China includes getting more funding from the Asian nation and reducing the role of the dollar in foreign trade transactions. A Brazilian delegation’s trip to China earlier this year yielded more than 15 agreements worth about $10 billion in Chinese investment pledges.
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