Paraguay's soy farmers ride tariff war 'toboggan'

Yahoo

25-04-2025

By Daniela Desantis and Lucinda Elliott
ASUNCION (Reuters) -For Paraguay's soy farmers and exporters, the global trade tariff war is an unpredictable ride that makes them fear the effects of volatility and also hope for more Chinese demand for South American soy meal and oil.
The landlocked country is the world's third largest soybean exporter behind Brazil and the United States, with exporters including Cargill, Viterra, and Bunge. Most of its output goes to crushing plants in neighbors Brazil and Argentina.
Farmers have taken a hit from fluctuating prices, partly impacted by the tariff standoff between the United States and global trade partners including major soybean buyer China.
"It's like a toboggan ride," Héctor Cristaldo, president of umbrella farming body the Union of Production Guilds told reporters this week, referring to U.S. tariffs that have roiled markets and buffeted grain prices.
"We don't know where the market will rebound, and where it will stabilize."
A silver lining is a better weather outlook ahead for next season, after dry weather knocked the country's soy harvest down to an estimated 8.5-9 million metric tons in the current season. Late soy is still being harvested.
"We are moving from a 'neutral cold' climate condition to a 'neutral warm' one, which could bring a good level of precipitation," Hugo Pastore, CEO of Paraguay's Exporters Association, CAPECO said.
Industry sources estimated production of over 10 million tons in the 2025/26 season as rains bring relief to crops - and boost river levels key for transporting the oilseed. U.S. government data forecasts as much as 10.9 million tons.
The rise will be a boon for Paraguay, even if planting only starts later in the year. Lower exports in the first quarter - down to 2.2 million tons from 2.5 million a year earlier - have hurt dollar incomes and weakened the local guaraní currency.
Authorities have, though, cautioned that market volatility following trade tariff announcements and new European Union regulations could create more challenges.
Exporters have until December 2025 - delayed earlier this year until then after lobbying by soybean exporting countries - to comply with new EU rules that all imported soybeans into the economic area be free from deforestation.
"We are concerned about tariffs and what happens when these new EU rules come in," Pastore said.
Paraguayan farmer Valdecir De Souza, who grows soybeans near Paraguay's border with Brazil, said he was positive due to better rains and could see a silver lining to the trade war.
He said it could boost the country's competitive edge, supplying raw beans to others, to then be sent to end markets such as China. Paraguay itself does not have direct trade relations with China due to its decades-long ties with Taiwan.
Agriculture analysts said an escalation of the new trade war could direct more Chinese demand to South America over time, as was the case for Brazil in 2018.
"We could have a competitive edge, finding new markets for our produce," 58-year-old De Souza said. "I see that on one hand it is quite worrisome... but on the other hand, this might open new doors for our soybeans."