In 2024, the trade partnership between Brazil and China completed 50 years, marking half a century of cooperation. In that year, the two countries expanded their trade ties and signed 37 new bilateral agreements. 

Today, Brazil is the world’s largest exporter of soybeans, while China is the world’s largest buyer. This interdependence has been a key factor in bringing governments closer together and strengthening trade relations in recent years. 

This type of relationship has a direct impact on global soybean prices. In this text, we will examine how the rapprochement between Brazil and China has affected the product’s prices, the role of hedging in this context, and other relevant aspects. Enjoy the read! 

Read also:

• Brazil’s role in China’s food security: a 50-year partnershi

Trade agreements between Brazil and China 

Since 2009, China has been Brazil’s largest trading partner, with bilateral trade reaching a record US$157 billion in 2023. This figure was only US$6.6 billion in 2003, demonstrating the remarkable evolution over the last 20 years. In addition, the Latin American country has also been the largest supplier of food to the Asian nation since 2017. 

See some data collected by the Brazilian Ministry of Agriculture and Livestock (Mapa): 

• In 2023, sales to the Chinese market accounted for 36.2% of Brazil’s total agribusiness exports; 
• China contributed to a US$9.53 billion increase in Brazilian exports between 2022 and 2023; 
• Among the top ten products exported by Brazil, China was the main destination for eight of them; 
• Brazilian imports from China totaled $1.18 billion in 2023; 
• In the first four months of 2024, Brazil exported US$17.09 billion worth of agricultural products to China. 

The diversification of this trade relationship is reflected in the exchange of products and services. Among the main commodities exported by Brazil to China are: soybeans, corn, sugar, beef, poultry, cellulose, cotton and pork. On the other hand, the Asian country exports forest products, fibers and textiles to Latin America.

See the charts on the map, which show the main importers of Brazilian products in 2001 and 2022. China has captured a large part of Brazil’s supply and has had a significant impact on the country’s revenues: 

Read also: 

• Real estate crisis in China: impact and strategies to contain the effects 

New trade agreements between countries 

Chinese President Xi Jinping visited Brazil to sign 37 bilateral agreements in areas such as agriculture, energy, infrastructure and trade. These advances strengthen the long-term commitment between the two countries and have a direct impact on the soybean production and marketing chain. 

Highlights include: 

• Collaborative plans to grow the industry; 
• Increased investment in agribusiness logistics infrastructure; 
• Technological cooperation in the agricultural sector; 
• New regulatory frameworks for food exports. 

Read also:

• The Impact of Brazil’s Monetary Policy on the Commodities Market 

Brazil-China rapprochement impacts soybean prices 

The agreements signed should increase Chinese demand for Brazilian products, especially soybeans. This growth tends to influence the commodity market in other countries, such as the United States, another major exporter of the product to the Asian nation.

The election of Donald Trump as president of the United States is another factor that has driven this price volatility. His history of trade tensions with China could hurt sales of North American soybeans to the Asian country, putting further pressure on the product’s market value.

American farmers also expect the next president to invest less in biofuel production. Soybeans have a good share of that market, and demand could decline without major government support.

Also read:

• The impact of the US elections on the global economy 

 The role of hedging in the volatility of soybean prices 

These expectations of policies less favorable to American exports have intensified the perception of China’s dependence on Brazil. Such factors increase market uncertainty and the volatility of soybean and other commodity prices. 

In this scenario, hedging is an essential tool for mitigating financial risk. It allows producers and traders to lock in future prices for soybeans, even as political and climate issues change the value of the commodity. 

At Hedgepoint, we offer customized hedging products to reduce your exposure to market volatility. Contact our team to learn how you can financially protect your business from commodity volatility. 

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