Cofco signs multi-billion agreements to purchase soybeans and palm oil from Brazil

The Chinese state-owned company Cofco announced this Monday (10) the signing of agreements to purchase soybeans, soybean oil, and palm oil from Brazil, totaling nearly 20 million tonnes and valued at more than USD 10 billion (approximately R$52.83 billion). These contracts were signed with trading companies, including ADM, Bunge, Cargill, and Louis Dreyfus, at the China International Import Expo in Shanghai.

The agreements, established last week, mark a significant step in agricultural trade between China and Brazil. Cofco did not mention U.S. agricultural products in its statement, which suggests a possible shift in import preferences. Despite the recent reduction of some tariffs on U.S. agricultural products, China still maintains a 10% tariff on all American imports, limiting the potential for trade recovery.

Impact of tariffs on imports
Tariffs on soybeans, which dropped from 23% to 13%, are still considered high for private buyers. Traders are watching purchases by state-owned companies such as Cofco, especially after the White House said Beijing committed to purchasing 12 million tonnes of American products by the end of the year.

Competitive prices of Brazilian soybeans
Cofco’s decision to purchase Brazilian soybeans comes at a time when prices are lower compared to U.S. products, even with reduced tariffs. This price dynamic may influence the purchasing decisions of other importers, as Brazilian soybeans become a more attractive option.

Final considerations
Analysts and traders are closely watching Cofco’s move as they try to understand its implications for the global food market. The Chinese state-owned company, one of the largest in the sector, plays a crucial role in agricultural supply chains, and its decisions can significantly affect prices and product availability on the international market.

Cofco’s purchases reflect not only a strategy of supply diversification but also a strengthening of trade relations between China and Brazil, which are among the main suppliers of agricultural products to the Asian giant.

Source: Folha de S. Paulo

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