China will replace some of its Ukrainian maize imports with Brazilian grain, reducing US exports and becoming a competitor with the EU authorities.
The agreement helped push down Chicago Board of Trade futures by 1.8% on Tuesday, traders said in what is seen as a turning point in global trade deals.
Russia’s invasion of Ukraine has disrupted crop shipments from the Black Sea, with importers and food companies scrambling to find alternative suppliers.
The Brazil deal signals China is seeking to replace maize, also known as corn, that it would normally purchase from Ukraine, which was a major global grain exporter until Moscow invaded.
Beijing’s deal with Brazil may reduce US exports to China and create a new competitor for EU importers that buy Brazilian corn, market analysts said.
Global Trade Flows
“This is a big move,” said Terry Reilly, senior commodity analyst for Futures International. “It’s a shift in global trade flows.”
Beijing and Brasilia signed the agreement on quarantine requirements for importing Brazilian maize this week. It follows record maize imports by China last year after bad weather and tight supplies sent domestic prices soaring.
Brazil is expected to bring in a record harvest despite weather problems in some areas.
Anec, a Brazilian association that represents cereal exporters, anticipates it will take about three months for Brazil’s government to revise phytosanitary requirements for exports to China.
The two nations also agreed on a protocol for the export of Brazilian peanuts to China, the ministry said, and made progress on potential agreements over soy protein and soymeal.
In a separate statement, Brazil’s agriculture ministry said protocols were signed for the export of cottonseed meal, thermo-processed beef and melon to China, as well as Chinese pear exports to Brazil.
- Reuters, with additional editing by George Russell