Brazil looks to fill Chinese plates as US tariffs shift soybean, pork trade

Brazil is solidifying its position as China's favored trade partner in the soybean and pork markets amid escalating trade tensions with the US, with sources anticipating a Southward shift in Beijing's trade flows.

Following US President Donald Trump's announcement of a new round of tariffs and China's retaliatory measures, Brazil has emerged as a favored alternative for Beijing, a partnership that is enhanced by a comprehensive bilateral trade ecosystem between the two countries.

China has investments in Brazil covering roads, railways and ports, which provide a suitable ecosystem for furthering bilateral trade. In addition, both countries have signed large currency swap agreements that support agricultural trade, a China-based source told Platts, part of S&P Global Commodity Insights.

China has paused soybean imports from the US, with no new purchases done since mid-January, right before Trump took office, according to sources.

The move also aligns with the US Trade Representative's announcement of extended service fees on Chinese ships, aimed at countering Beijing's maritime dominance. While China has made no new purchases of US corn and soybeans since mid-January, the number of US' incoming LNG ships has also dropped to zero over the last 70 days, market sources said.

Brazil's soybean exports look to gain

"For soybeans, we expect Chinese demand for Brazilian supply to remain strong, especially between February and June, when Brazil dominates the global export window," Geraldo Isoldi, agricultural markets analyst at King Korn, said. "If there's any disruption in US shipments due to tariffs, it's likely that Chinese buyers will accelerate their purchases from Brazil – as seen in past trade disputes."

In the period from April 1, 2024, to date, US soybean exports stood at 45 million mt, while supplies to China amounted to a net volume of 22.6 million mt, or 50.2%, according to S&P Global Commodities at Sea(opens in a new tab).

In the same period, Brazil's soybean shipments were recorded at 107.6 million mt while supplies to China stood at 81.6 million mt, or 75.8%, CAS data showed.

Brazil is projected to export 108 million mt to 110 million mt of soybeans in 2025, according to Daniele Siqueira, market analyst at AgRural.

Brazil's price competitiveness, especially during peak export periods, supports its preference. Platts assessment showed SOYBEX FOB New Orleans and SOYBEX FOB Santos at comparable levels in April, but Brazilian prices are lower from December through the first quarter, when China buys large volumes.

More Brazilian pork on Chinese plates

As with soybeans, any potential trade disruptions with the US could also send China looking for Brazilian pork supplies.

In 2024, China was the third largest export destination for US pork, with a total volume of 467,228 mt and a nominal value of $1.11 billion, according to the USDA's Foreign Agricultural Service.

"For pork, although Chinese imports have slowed compared to the peak in 2020, Brazil remains competitive, both in terms of cost and fewer sanitary restrictions," Isoldi added. "Any new tension between the US and China could further favor Brazil if Chinese buyers once again seek alternatives to American protein suppliers."

Between January and March, China was the second-largest buyer of Brazilian pork at 14% in US-dollar terms, Hyberville Neto, director at HN Agro, said.

While lower farrowing continues to weigh on the US pork outlook, all seem favorable for Brazilian supplies.

"The number of animals in feedlots at the beginning of the year is high, producers' investment has been significant, productivity is growing, exports and the domestic market are heated, and profitability is above 30%," Joao Castaldo, a Brazilian agronomist and investor, said. "Brazil will have enough supply to meet external demand."

US-China agreement can alter dynamics

"A new agreement between the US and China, like the one in 2019-20, could completely change the game again," Isoldi said.

In January 2020, the two countries signed the Phase 1 US-China trade deal to ease trade tensions. Under this agreement, China agreed to buy an additional $32 billion worth of US agricultural products over two years, including soybeans.

China's share in total US soybean exports stood at 35.56% in MY 2019-20, equivalent to a net volume of 16.27 million mt, according to the USDA. China's share was up 21.6% from the previous year.

In MY 2020-21, China's share in US soybean exports jumped 117.4% year on year to 35.36 million mt, equivalent to a 57.28% share out of the total outflows, USDA data showed.

"In any case, global trade has been adapting quickly to change — as it did at the beginning of the Black Sea conflict — but it needs more definitive steps to outline its new directions," Isoldi added. "For now, that's not happening — everything feels like a big mess."