China Becomes Brazil's Largest Consumer of Agricultural Commodities

Filed Under: Import from China | Viewed by: 2168 Persons

According to Newspaper of S. Paulo (Polha de S. Paulo), China is trying to catch up with Europe and is becoming Brazil’s biggest consumer of agricultural commodities. In the first part of this year, China has purchased 24.3 percent of the Brazil’s export agricultural commodities, and that number of Europe, Middle East, Latin America, and America are 24.6 percent, 8.2 percent, 7.7 percent and 5.9 percent respectively. Because of the high price of soybeans, China will surpass European Union by the end of this year or the next at the latest. One thing to be noted is that China is a single country, but European Union is a group of countries.

China is accelerating the purchase of Brazil’s grain and other agricultural commodities. In 2008, China’s market share of Brazil’s agricultural commodities accounted for 11.5 percent, and the number of European is 32.9 percent. The volume of trade in agricultural commodities between China and Brazil has doubled in the last three years, rising from 8 billion dollars in 2008 to 18 billion dollars in 2011.
 
The problem of the trade in agricultural commodities between the two countries is that the trade is not diversified enough. In the agricultural commodities exported from Brazil to China, the market share of soybeans is 66.7 percent, that of wood pulp and cellulose is 7.5 percent, and sugar is 7.3 percent. The Brazilian farmers are dependent on China increasingly and 67.1 percent of their soybeans sell to China.

Brazil has already become the second biggest soybean supplier of China and it occupies a share of 36.9 percent in Chinese soybean importing market, in which America ranks in the first place and the market share is 42 percent. Nowadays, Americans do not expand their soybean production any more, and they are more willing to plant corn instead. However, Brazil has enough land to develop soybean planting and it is an inevitable trend that their market share of soybeans will increase in Chinese market.

By the end of October, the total output value of Brazil’s soybeans in 2012 reached 67.1 billion Brazilian real (the current exchange rate between Brazilian real and US dollar is 2:1), a rise of 105 percent compared to that in 2006 (which is 32.7 billion Brazilian real). The record before is 57.4 Brazilian real in 2011.

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