Economy

China diversifies imports from Brazil, but soybeans remain top priority

Jul, 18, 2023 Posted by Gabriel Malheiros

Week 202330

China increased its share of agricultural imports from Brazil in the first half of 2023, accounting for 37% of total exports (USD 83 billion), up from 35.5% in the same period last year.

One of the highlights of this increase is the diversification of imports, although on a much smaller scale than soy.

China opened its doors to Brazilian corn and, in the first half of 2023, purchased 1.34 million tonnes, worth US$374 million. In the first half of 2022, the Asian country did not purchase Brazilian corn.

China also increased imports of peanuts and peanut oil from Brazil and doubled purchases of green coffee, according to data from the Brazilian Foreign Trade Secretariat (Secex). China imported 19,300 tonnes of unroasted coffee from Brazil from January to June 2023.

In the case of soybean oil, although the Chinese prefer to import soybeans in grain, purchases from the Asian country rose to 133,000 tonnes in the six-month period, up 57%.

The highlight continues to be the purchases of soybeans in grain, which increased to 43.5 million tonnes in the year. The fall in the price of soybeans in the international market further opened the appetite of the Chinese.

Soybean purchases this year alone generated US$23.1 billion in Brazil. In 2022, the value had been US$20.3 billion in the same period. The United States Department of Agriculture (USDA) predicts that China will import nearly 100 million tonnes of the product in the 2022/23 crop year, a volume expected to be repeated in the following year.

Soybeans are becoming increasingly important for the betterment of the agricultural trade balance. This year, the Brazilian Association of Vegetable Oil Industries (Abiove) estimates that revenues from the soy complex (grains, meal, and oil) could reach US$67 billion.

See below Brazilian soy exports to China between Jan 2019 and May 2023, according to DataLiner.

Soy exports to China | Jan 2019 – May 2023 | WTMT

Source: DataLiner (click here to request a demo)

According to estimates by the association, this volume of foreign exchange is due to record exports of 94 million tonnes of grains and 21 million tonnes of meal.

Brazil has a record crop of 156 million tonnes in its favor this year. The United States and Argentina, direct competitors, suffered crop failures. In 2023/24, the Argentines will be able to return to average production of 48 million tonnes – this year, they had only 25 million – while the North Americans are expected to remain at the same level.

China also increased purchases of Brazilian meat, mainly chicken and pork. With the fall in average international prices, Chinese spending this year fell to US$4.1 billion on animal proteins, below the US$4.7 billion of last year.

Chinese spending in Brazil grew more with food purchases than other agricultural products, such as wood. In the case of food, the evolution was 9% in the first half, well above the 4% of the other products in the sector.

China increased food purchases while decreasing agricultural product purchases. The same thing occurred in North America, Brazil’s second-largest trading partner.

The Europeans, on the other hand, reduced both food imports and other agricultural products.

In the food sector, the countries of South America increased their purchases, with spending rising to US$4.7 billion. The Africans, on the other hand, kept imports stable at US$4.3 billion during the period.

Cotton is one of the products that suffered one of the most significant reductions in sales to China this year. Exports fell to 48,000 tonnes, the lowest volume in five years. As a result, China ranked only fourth in the ranking of imports of the Brazilian fiber. In 2021, it was at the top of the list, and in 2022, in second place.

Source: Folha de S. Paulo

To read the original report, see: https://www1.folha.uol.com.br/colunas/vaivem/2023/07/china-fica-com-37-das-exportacoes-do-agro-e-diversifica-importacoes.shtml

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