Brazil is prepared in the event China removes tariffs on U.S. soy, which had driven down prices for the oilseed in Chicago and driven up the premiums over U.S. prices paid for Brazilian beans, outgoing Agriculture Minister Blairo Maggi said on Friday.
Maggi, who will step down when President-elect Jair Bolsonaro takes office Jan. 1, said removing the tariffs would lead prices in Chicago and Brazil to converge and bring greater predictability to the soy market that would benefit Brazilian farmers.
The U.S.-China trade war caused Chinese purchases of Brazilian soy to soar to 80% of its exports of the grain this year, as the Asian nation sought to buy more from non-U.S. sources. This drove up Brazil’s soybean premiums over Chicago prices to historic highs.
”Brazil is absolutely prepared. ... The withdrawal of the tariffs there in China for American soy won’t have any influence,” Maggi said. “The market will return to its normal baseline where it was before, or very close.”
Maggi also said that at any moment China could permit imports from more Brazilian poultry and pork plants, potentially before the end of the year, following a Chinese visit to inspect meatpacking factories in the country last month.
“We expect that at any moment some plants could be permitted (to export)...we are expecting that by the end of the year China is likely to okay something in this area,” Maggi said.
He said 79 plants have requested permission to export to China, raising the possibility that Brazil could double the number of plants exporting poultry and pork to China if permits are granted.
Maggi anticipated he has urged Bolsonaro’s future Agriculture Minister Tereza Cristina Dias to maintain Brazil’s presence in foreign markets and to make a trip to visit Arab countries and China soon after assuming her position.