Tariffs or not, Brazil’s ag export uptrend to continue

23.06.2018

Global competition for trade in agricultural commodities is stiff, and the retaliatory tariffs hanging over US farm goods are making it tougher.

The European Union and Russia have emerged as the world’s leading wheat suppliers, according to the US Department of Agriculture’s (USDA’s) Foreign Agricultural Service, taking advantage of their large supplies, competitive pricing, and geographical proximity to major markets in Africa and the Middle East.

At the same time, Brazil is expanding its position and is on track to surpass the United States as the world’s top exporter of corn within five years. Although the United States has enjoyed a dominant position for decades, grain prices and aging infrastructure are chipping away at that dominance. Now the uncertainty associated with the Trump administration’s penchant for renegotiating trade agreements and the growing trade tensions between the United States and its allies have come into play.
Brazil — a likely postmodern export giant

Massive investments in Brazil’s export infrastructure, which the government embarked upon years ago, are starting to pay off. Five years ago, Brazil displaced the United States as the top soy exporter, and it won’t be long before it moves ahead of the United States as the world’s leading corn exporter.

There’s plenty in Brazil’s favor. They’ve got millions of acres to cultivate, good weather, and agricultural know-how. The country has also made significant strides to improve road and port infrastructure, which help facilitate the transportation and trade of Brazilian commodities such as corn, soybeans, beef, and sugar.

The USDA forecasts US corn exports will fall by 6.2 million tons, valued at about $1 billion, in the current marketing year. However, Brazil’s corn exports are expected to rise by 1 million tons compared with a year ago.

Furthermore, US corn is expected to account for only 33.8 percent of global corn exports in the 2017-2018 marketing year, down from 62.6 percent a decade ago, according to USDA projections. Brazil’s projected corn exports of 35 million tons would account for 22.7 percent of global shipments. Twenty years ago, Brazil exported a mere 6 million tons of corn, less than 1 percent of the world total.



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