Greater challenge ahead for Brazilian agribusiness in Asia

President Luiz Inácio Lula da Silva returned from a recent trip to Indonesia and Malaysia, where he took part in the Association of Southeast Asian Nations (ASEAN) summit, highlighting the potential for expanding Brazilian agribusiness in what is currently the world’s most dynamic economic region.

That may happen — but on a smaller scale than expected. U.S. President Donald Trump was in the same region at the same time and, using his arsenal of tariffs, secured immediate concessions from Asian countries to purchase more American products.

Today, international trade is driven not only by cost and freight but increasingly by political motivations. This trend is best illustrated by the truce reached between Trump and Chinese President Xi Jinping.

After months of halted purchases, China agreed to import 12 million tonnes of soybeans from the U.S. by the end of this year, and at least 25 million tonnes annually through 2028. Historically, China has imported between 25 and 30 million tonnes of U.S. soybeans per year, and Washington now sees this as a “solid base” for restoring those volumes.

This means that, in the short term, China will reduce soybean purchases from Brazil, prioritizing U.S. supplies — at least until Brazil’s new harvest enters the market in February next year. The expansion of Brazilian soybeans — and soy meal — into other Asian markets may also lose some momentum.

The U.S. is also targeting other products. U.S. Meat, representing the American meat sector, said in comments sent to the U.S. Trade Representative (USTR), as part of an investigation into Brazil’s trade practices, that Brazil — already the world’s largest beef exporter — is on track to surpass the U.S. as the world’s top beef producer this year.

Brazil’s beef exports account for 32% of its total production, and pork exports 35%. The country ships heavily to China and has rapidly expanded into other destinations — including the United States (before the tariff hike), Mexico, and more recently Canada. In pork, Brazil ranks as the world’s fourth-largest exporter, with the Philippines now surpassing China as its top buyer.

American cotton producers have also accused Brazil of eroding their market share in Asia’s massive textile sector. Since 2010, Brazil’s cotton output has more than tripled, making it the world’s largest exporter. U.S. growers argue that Brazil’s growth relies on an “aggressive low-price policy” and have urged Washington to step in to curb losses.

Almost simultaneously with Trump and Xi Jinping sealing their trade truce in South Korea, another key event took place thousands of kilometers away — the Brazil Commodities Forum in Geneva, one of the world’s main hubs for commodity trading.

Among traders and representatives from the financial and energy sectors, the consensus was that the era of tariffs and “America First” policies in Washington initially opened opportunities for Brazil, as countries dependent on soy and corn turned to Brazilian suppliers. Now, however, the trend is reversing: in recent weeks, operators from Japan, the UK, and Southeast Asia have increased U.S. purchases — not for purely commercial reasons, but to ease political pressure from Washington.

Participants at the forum agreed that Brazil’s outlook is no longer purely positive. Chinese demand has stabilized, farmland prices that soared in 2021–2022 remain high, and the U.S. will likely continue its trade “rebalancing” strategy.

The moment serves as a reminder that politically driven demand can erode market share, even when Brazilian producers are more efficient. Brasília cannot influence Washington’s agenda — but it can make itself harder to replace by staying cheaper and greener.

Internally, however, the high cost of capital — with benchmark interest rates around 15% — makes financing decisions much more expensive.

Brazilian lawyer Heloisa Slav, a commodities specialist and organizer of the Geneva forum, noted that Brazil’s competitiveness is no longer just about “land and sunshine.” The next stage of growth, she said, will depend on three converging pillars:

1. Maintaining the position as the lowest-cost, large-scale producer;

2. Proving sustainability in markets with ever-higher standards;

3. Preserving access to both U.S. and Chinese demand amid global turbulence.

She added that new requirements from Europe and the United States — such as deforestation-free production, traceability, and low carbon intensity — are making sustainability a decisive factor for market access.

Brazil is highly exposed to these new rules, but not unprepared: a proven sustainable origin may be preferred over one that is simply cheap.

Brazil is, in many ways, the “China of agribusiness”, but risks lie ahead — with trade becoming increasingly politicized and domestic financing costs high. As Heloisa Slav noted, navigating this scenario will be key for Brazil to move from being merely a “major exporter” to becoming a “preferred supplier” in the new global order.

Source: Valor Econômico

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