Page 39 - Export or Bust eBook

China is also rapidly increasing the amount of soybeans it buys from Brazil, some of which goes through
São Luís.

Brazil shouldn’t be seen as a threat to farmers in the U.S., once the largest soybean producing and
exporting country in the world, Brazilian Agriculture Minister Blairo Maggi told Agri-Pulse in an
interview, but that may be impossible as the country continues to peel off more of the U.S. market share
in China.

“Yes, there is a premium for Brazilian soybeans because China wants them,” Maggi said. “It’s an
incentive for Brazilian farmers to plant more …”

The new threat of Chinese tariffs on U.S. soybeans is cutting into U.S. exports, but if there’s one thing
American farmers can count on it's that Chinese livestock producers will be forced to continue buying
from them because Brazil can’t steal the entire market.

At least not yet. Brazil already supplies about 56 percent of China’s demand and that figure is
expected to grow this year as U.S. and Chinese negotiators continue to square off over steel,
aluminum, solar cells, washing machines and intellectual property theft.

The threat of Chinese retaliatory tariffs on U.S. soybeans – a whopping 25 percent – continues to scare
away Chinese buyers from U.S. suppliers and make Brazilian imports even more attractive.

Marcos da Rosa, president of the Brazilian Association of Soybean Producers (APROSOJA) also sat
down for an interview with Agri-Pulse and said he expects Brazil to export at least 65 million tons of
soybeans to China for the 2018-19 marketing year, a 20 percent increase from 54 million tons in 2017-
18.

“Chinese demand is increasing and they like the higher protein levels in Brazilian soybeans,” he
said, dismissing the possibility of a trade war between the U.S. and China. “Trump will listen to
the farmers and prevent China from putting the 25 percent tariff on U.S. soybeans.”

But U.S. farmers aren’t so confident.

“We all know the numbers— China imported $13.9 billion of U.S. soybeans in 2017, 60 percent of total
U.S. exports and nearly one out of every three rows of annual soy production,” said American Soybean
Association President John Heisdorffer in a recent message to the group’s members. “A 25 percent
tariff on U.S. soybean shipments to China will have a lasting effect on soy growers and the rural
economies that depend on them.”

And Brazil is more than willing to forego domestic demand in order to supply China and the premiums
it is willing to pay to avoid tariffs.

“It’s possible that Brazil will sell too much to China and then have to import from the U.S. to
make up for domestic demand,” da Rosa said, speaking to Agri-Pulse at an exclusive luncheon hosted
by a group representing farm-state lawmakers in an upscale neighborhood of Brasilia where lobbyists
and lawmakers often gather.

Maggi agreed, saying there is a precedent for Brazil over-selling and then being forced to import from
the U.S.

www.Agri-Pulse.com 37