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January 17, 2020 | AJOT

Phase 1 Deal a ‘Buzz Kill’ for Brazil

Most likely deal will push market back to status quo

The Phase 1 trade deal may have been short on details about Chinese agriculture purchases, but one thing seems clear: Brazil’s two-year, non-stop soybean bonanza will likely come to an end.

According to a report at AJOT, don't celebrate too much. While China agreed to spend about $32 billion more in US farm goods annually over the next two years, Brazil soy won’t be squeezed out of the equation entirely even in a worst-case scenario.

More likely, traders and analysts say, harvesting cycles and price differentials will push the market back to the old status quo.

That means Brazilian supplies will be in high demand in the first half of the year, when the nation reaps its crop and therefore has the competitive edge. The US will dominate in the second half, when its output gains steam and it can better compete on price.

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