Cargill says trade war threatens its soybean processing plans in Brazil

U.S. President Donald Trump’s trade war with China may be good for Brazil’s soybean exports, but top executives at Cargill Inc. see a risk to the company’s plans to expand oilseed processing capacity in the country, Bloomberg reported.

Cargill Brazil President Paulo Souza said China’s growing demand for Brazilian soybeans will mean increased competition in the South American country for the same beans used by oil-extraction plants to produce soybean oil, biofuels and soybean meal. Uncertainties surrounding tariffs could affect the company’s plans to increase processing capacity.

“We’re always looking at the flow of investment, but we need to see if these unfavorable tariffs on processing Brazilian soybeans continue,” Souza said. “If so, we will have to reconsider our decision.”

He added that it is not easy to say Brazil needs to produce more as global demand remains flat.

Cargill has invested heavily in Brazil’s agricultural industry to expand its soybean processing capacity. In 2023, most of Cargill’s Brazilian investment went toward acquiring three soybean processing plants and biodiesel units from grain processor Granol, as well as four warehouses in the country. Last year, the company invested another R$1.7 billion in infrastructure improvements, as well as a new grain terminal designed to increase shipments from Amazon ports. The company plans between R$1.5 billion and R$2 billion in investments this year, in part to increase biodiesel and soybean meal production and expand its barge fleet.

Meanwhile, Cargill Brazil reported an accounting loss of 1.7 billion reais ($275.3 million) for 2024, compared with a profit of 2.5 billion reais in the previous year, mainly due to a stronger dollar, which increased the company’s debt in reais. Revenue from Brazil fell 14% to R$109.2 billion, reflecting a 12% decline in all products shipped by the company due to weather-related crop losses.

“Demand moving from one country to another ultimately makes products more expensive. When the price goes up, it affects demand,” Souza said. – “I don’t see the good side of a trade war.”

Tags: Cargill, Brazil, soybean