Brazil soybean prices fall after tariff deal with China

Brazil’s soybean export premiums fell on Monday after the United States and China mutually cut tariffs, reflecting expectations that the Asian country will be able to buy more U.S. soybeans than expected amid the trade war, analysts said.

Domestic port premiums tend to rise when demand for the Brazilian-produced commodity increases, and reached about $1.40 a bushel in early April as global trade tensions escalated. However, with the 90-day tariff cut, U.S. farmers could benefit from higher Chinese demand for the oilseed.

Port premiums at the Brazilian port of Paranagua fell 10% on Monday from Friday to $0.50 a bushel.

Rafael Silveira, an analyst at Safras & Mercado, said the agreed tariff cuts could encourage China to seek more U.S. soybeans that are still being grown for the 2025/26 crop. Meanwhile, Brazil is already exporting its largest crop ever, about 170 million tonnes.

China cannot abandon U.S. soybeans because relying solely on South American soybeans would be risky for the world’s largest soybean importer, said grain broker Adelson Gasparin. He also raised the competitiveness factor.

“With global [soybean] supply growing faster than demand, China may have a better chance to negotiate on prices,” Gasparin said.

Silveira said the announced U.S.-China deal could significantly change the market dynamics, especially given the scenario of declining U.S. soybean acreage.

The U.S. Department of Agriculture said Monday that U.S. soybean farmers are prepared to reduce their harvested area to 82.7 million acres (33.5 million hectares), down from 86.1 million acres (34.8 million hectares) in the previous crop.

Raphael Bulaskoski, a market intelligence analyst at StoneX, said the U.S. soybean harvest will begin in September, when the export program will be at its busiest. For now, he said, caution is needed to understand the ultimate impact of the tariff truce.

“We saw the market react with a lot of optimism (to the tariff cut announcement), but that doesn’t mean we’re going to see a huge jump in soybean shipments to China,” Bulaskoski said.

Tags: China, Brazil, prices, soybean, USA