Will China restrictions on US soya and corn lead to severe problems in Brazil?

[touchring]

If China imposes restrictions on soya and corn imports from the US, China will be buying more from Brazil and Argentina than what they can supply, possibly driving up the price of soya by more than 25% in these countries. Since soya meal is also used chicken, pig and cattle farming, won't Brazilian farmers be hit by the rising cost of animal feed? In the most severe scenario, there might even be a shortage of animal feed if Chinese importers are able to take all the soya and corn.

It will be interesting how Brazil will solve this problem. One way is to impose export tariffs or quotas on soya exports.

[jk]

Re: Will China restrictions on US soya and corn lead to severe problems in Brazil?

commodity prices in brazil can't uncouple much from global prices. any difference will be arbitraged. e.g. in your scenario demand for argentine and brazilian soy and corn goes up because of added chinese demand. otoh, this piece if demand will no longer exist for u.s. soy and corn, lowering their prices. in your scenario brazilian farmers would sell their soy at a premium to the chinese and import cheaper u.s. soy to feed their livestock. i doubt price disparities will get far enough for this to actually happen. somehow the price difference will be arbitraged [net of shipping costs]. soy and corn are supremely fungible.