Capitol Commodity Hedging Services

Capitol Commodity Hedging Services

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Brazil’s farmers dump sugar for soy as U.S.-China trade war boosts demand

Last year, Brazilian farmer Gustavo Lopes sized up his sugarcane plantation against his soybean fields.

He looked at global trends, including rising U.S.-China trade tensions and a stubborn sugar-market glut. Then he tore up the last of his cane fields and ditched a decades-old supply contract with a local sugar mill.

Lopes planted soybeans across his 1,600-hectare farm in Sao Paulo state – a bet that paid off earlier this month when Chinese buyers loaded up on South American soy after Beijing imposed tariffs on U.S. beans. The farmer got his highest price ever for soybeans.

“It was unusual for this time of year,” Lopes said in an interview at his farm, where he’s prepping to plant another soy crop in September. “It’s got to be a result of Chinese demand.”

Shifting trade flows are redefining the Brazilian landscape, spurring more farmers to align their crops with Chinese appetites. The nation’s soy plantings have expanded by 2 million hectares in two years – an area the size of New Jersey – while land used for cane shrank by nearly... To continue reading, http://ccstrade.com/blog

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