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Brazil Soy Farmers, Exporters Brace for End of U.S., China Tariffs

SAO PAULO, Dec 3 (Reuters) - Brazilian soybean farmers anticipate a drop in prices if China lifts tariffs on U.S. soy in March, when new trade terms between the world’s two largest economies may be disclosed and South American nations will be collecting another bumper crop.

If China’s 25% tariff on soy were to be lifted in March, U.S. soybeans could flood the market just as Brazil and Argentina are harvesting their crops, said Wellington Andrade, a director in Mato Grosso state for industry group Aprosoja, on Monday.

If China lifts tariffs on U.S. soy in March, it could coincide with the end of Brazil’s harvest, he said. “If China turns to the U.S. to buy soy then, where will local (Brazilian) producers sell theirs? The internal market does not absorb everything,” he said.

Washington and Beijing sealed a 90-day ceasefire on new tariffs at Saturday’s G20 meeting, spurring U.S. soybean futures to rally the most since August as other commodity and equity prices posted broad gains.

China President Xi Jinping also promised to purchase more agricultural products from U.S. farmers immediately.

The agreement opens the door for the United States and China to negotiate lifting tariffs during the 90-day moratorium.

In Brazil, soybean port premiums slid $0.10 per bushel on Monday.

The trade war may have created short-term opportunities but is bad in the long run, according to Sergio Mendes, head of exporters association Anec. He said no other market can replace China, which has bought about 80% of Brazil’s beans this year.

“If China opens up all the floodgates, it’s unlikely Brazil will match this year’s record exports,” he said.

Through November, Anec data showed Brazil, the world’s largest exporter of the oilseeds, was able to boost soybean shipments by almost 23% to 80.1 million tonnes, thanks to the trade war.

Mendes believes whatever the terms of a tentative agreement, soy prices could drop anyway in March because Brazil’s big crop will already be available.

"Brazil is a supplier which China could hardly afford to replace,” Mendes said. (Reporting by Ana Mano Editing by Susan Thomas)

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