How U.S. elections impact Brazilian agribusiness

The outcome of the U.S. presidential election is expected to influence global agricultural trade, with effects that will directly or indirectly impact Brazil. The contest between Kamala Harris and Donald Trump for rural voters highlights issues such as tariff barriers, agricultural protectionism, sustainability, climate change, and the future of U.S. trade and exports.

Geopolitically, Chinese demand for U.S. agricultural products has been slowing. Managing trade relations and potential sanctions on the Chinese market presents a challenge for the candidates, while Brazil continues to gain market share in Asia and is already China’s largest supplier of soybeans and corn.

The U.S.-China trade dispute, initiated under Mr. Trump, led to tariffs on American agricultural goods, prompting China to seek alternative suppliers, particularly in South America. This shift has benefited Brazil, which has become a key partner in meeting China’s demand for soybeans and corn. Today, Brazil is the largest soybean supplier to China.

Over 70% of soybeans entering the Asian market are from Brazil. According to the consultancy Biond Agro, Brazilian soybean premiums are improving. The National Association of Cereal Exporters (ANEC) reported that Brazil shipped 63.9 million tonnes of soybeans to China from January to August this year, accounting for 76% of Brazil’s soybean exports.

Brazil’s competitiveness has also benefited from the depreciation of the real against the dollar and investments in infrastructure and logistics.

The chart below reveals the most exported goods in maritime containers from Brazil to the United States between January and August 2024. The data, extracted from Datamar’s DataLiner platform, comprise only maritime, long-haul shipments.

Top Exports in Containers to the US | 2024 | TEUs

Source: DataLiner (click here to request a demo)

Policy proposals

A S&P Global Commodities Insights analysis reviewed key proposals from the candidates for agribusiness.

Ms. Harris’s campaign is reaching out to rural voters in key states such as Georgia and Pennsylvania. On the other hand, agribusiness groups and associations of grain and livestock producers, especially in the soybean and corn sectors, are largely backing Mr. Trump’s return to the White House.

The Democratic candidate’s platform emphasizes export diversification and addressing “unfair” trade practices, with a focus on energy transition policies similar to those of President Joe Biden. Ms. Harris aims to appeal to small and medium-sized rural voters with a plan for “net-zero emissions by 2050,” climate-smart agriculture, expanded biofuel production supported by the Inflation Reduction Act (IRA), and investments to bolster supply chain resilience, according to the S&P report.

Meanwhile, Republican candidate Donald Trump promotes prioritizing American production with a focus on tariffs and sanctions and expanding agricultural exports. Analysts interviewed suggest this stance could appeal to agribusiness, which has been calling for such policies.

Mr. Trump’s platform also includes plans to review and potentially reduce Environmental Protection Agency (EPA) regulations, while citing “relief” on tariff restrictions, tax cuts, and incentives to restore supply chains.

Grain producer associations tend to support the Republican candidate. Traditionally, the U.S. commodity agriculture sector leans conservative, though it faces a contradiction between economic protectionism and expanding exports.

Global trade

The close race puts the U.S. agricultural sector at a “turning point” between sustainable expansion and competitiveness through deregulation, analysts from American cooperatives and agricultural research institutes say.

Brazil could either benefit or suffer depending on U.S. policy decisions. This year, for example, Brazil overtook the U.S. as the world’s top cotton exporter and leads in soybean production and exports, positions historically held by the U.S.

With these gains and challenges from climate-related crop disruptions, representatives of Brazil’s agriculture sector express concern over the future of price policies, subsidies, credit, and market openings or sanctions.

According to S&P, data from the U.S. Department of Agriculture (USDA) shows export projections for the 2024/25 crop year rising year-over-year. However, market sources anticipate uncertainties about supply to China if tariffs and protectionist policies are imposed. U.S. agricultural exports to China declined between 2017/18 and 2018/19 before recovering in 2019/20 and 2020/21.

China is a crucial market for U.S. agricultural products, contributing 4.83% of corn, 52.45% of soybeans, and 10.98% of wheat exports in the 2023/24 forecast.

During his campaign, Mr. Trump advocated for stricter tariffs and the Trump Reciprocal Trade Act, appealing to large U.S. producers wary of foreign competition. “Market sources expect Trump’s return could bring back tariffs and potentially lead to Chinese counter-tariffs, significantly impacting U.S.-China agricultural trade,” the report notes.

Ms. Harris’s campaign similarly advocates for diversifying U.S. export markets and challenging “unfair trade practices from China or any competitor,” raising concerns about supply chains to China.

Beijing, meanwhile, has increasingly looked to South America in recent years to reduce its reliance on U.S. imports, with Brazil emerging as the top supplier of corn and soybeans in the 2023/24 crop year.

“Both candidates seem aligned on advancing biofuels, which is positive for the domestic market. However, they differ on sustainable agriculture and climate practices, both in their pledges and records,” adds S&P.

Source: Valor International

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