What are the impacts of the Trump administration on Brazilian agribusiness?

The new U.S. president, Donald Trump, has returned to the White House, announcing a series of measures and promising major government changes regarding domestic and foreign affairs. "Such measures have raised warning signs worldwide, and Brazil was no exception, after all, there are various trade agreements between Brazilians and Americans, and a possible disagreement could affect the trade balance, especially the sale of agricultural commodities to that country," states Enilson Nogueira, agronomist and market analyst at Céleres Consultoria.

According to him, the first most relevant point to consider is the unfolding of a possible trade war between the Americans and the Chinese and what its impacts would be for Brazilian agriculture. "Looking back a bit, in 2018, during Trump's first term, there was a series of tariffs in the soybean market. At that time, the cost of North American oilseeds became more expensive for Chinese importers to the point where they turned to Brazilian and Argentine soybeans," he recalls.

At that time, the analyst remembers, prices here in Brazil were almost three dollars per bushel higher than in the United States. To get an idea, at the current exchange rate, converting to Brazilian Reais per bag (the Brazilian producer's currency), that would be almost R$30 more than in the USA, which greatly impacts competitiveness.

"It's important to remember that in 2018, this fact happened only in the soybean market, and the trend is that it should continue. However, the novelty in this process is Brazilian corn, which has gained prominence in recent years. From 2021, the Chinese have qualified a series of Brazilian warehouses and ports to expand grain exports, and today, Brazil has also become a relevant producer and supplier of corn," he adds.

Looking at the present and future

Suppose on one hand the strength and appreciation of the American currency tends to depreciate other world currencies, on the other. In that case, it makes Brazil's exports more competitive, understands the market analyst from Céleres Consultoria: "Our current projection is for the dollar to be worth around 6 Brazilian Reais, oscillating a little below or above, but it should stay around that."

"The second factor to pay attention to in the Trump administration is that US policies may be a bit more inflationary compared to what has happened in recent years. In practice, this means more interest rates abroad and a weakened real here. The third point also has to do with this inflationary discussion because if interest rates don't fall abroad, it's difficult to see a scenario of monetary relief in Brazil as well," he justifies.

Having presented all this, the agronomist states that the short-term reading is that interest rates for the agricultural chain will remain higher: "With the Selic rate rising, close to 14%, the financial cost for rural producers increases. There is also the whole sectoral risk discussion. We have seen interest rates for the producing class between 15% and 20%, something that is very onerous and negative for Brazil and for the entire agricultural chain for 2025 and 2026."

Challenges and opportunities

With the appreciation of the American currency, says Enilson Nogueira, Brazilian producers tend to export more; on the other hand, this high scenario does not favor the purchase of inputs in the international market. "Therefore, fertilizers and pesticides should see price recovery mainly due to the exchange rate that has risen in the last three months, and this impact should already be felt now in the pricing for 2025," he understands.

Faced with the risks, the biggest challenge is the financial cost, concludes the specialist: "Producers who already have debts from past harvests need to be careful because if there is any climate stress, they may fall into a financial liquidity trap. In terms of opportunity, the dollar at R$6 sustains the price of exported products."

"We conclude that in 2025, looking at the glass half full, we have better price signals than 2024. Our food geopolitics is well established, and we are product suppliers to the world, not exclusively to the United States. This is well established and gives us security in the face of political developments. Certainly, producers will face great challenges, but with organization, they will also be able to take advantage of the opportunities that will arise," concludes Enilson Nogueira.

(Editing by Leonardo Gottems, reporter for AgroPages)