Brazil’s agribusiness sector remains resilient in the face of macro factors — such as trade uncertainty, presidential politics, and challenging farming conditions — as production on several of its key commodities is expected to make records again in 2026, according to a Rabobank outlook report.
Rabobank’s 2026 Brazil outlook report highlighted four overarching themes impacting the country’s ag sector, including ongoing trade turmoil, low commodity prices for grains and feed prices, pinched farming margins, and volatility from the 2026 Brazilian election.
The Trump administration levied various tariffs on Brazil in 2025, including a 18% reciprocal tariff on the Latin American country in what Trump referred to as “Liberation Day” for the U.S. Additionally, the U.S. threatened tariffs on Brazil for what the administration stated was persecution of the country’s former President Jair Bolsonaro.
Many of these tariffs were ultimately dropped, including those on Brazilian coffee and beef, because they increased U.S. consumer prices, Andy Duff, regional manager RRF&A South America for cane, sugar, and ethanol and lead author of the report, told AgTechNavigator.
“It still seemed like it would be difficult for the U.S. to find alternative sources for all of the Brazilian coffee, which was historically imported. And that is why eventually the situation was resolved. ... The flows [of Brazilian beef] would continue despite the tariffs simply because — not only the situation in the U.S. beef market — but all the major exporters are all one way or another supply constrained,” Duff elaborated.
Brazil’s growing relationship with China, the EU
Brazil’s strongest trading partners remain China and the E.U., accounting for 32.7% and 14.9% of all agricultural exports, respectively, in 2025, per data from Brazil’s Ministry of Agriculture and Livestock.
This year, Brazil and a bloc of Latin American countries, including Argentina, Paraguay, and Uruguay, signed a landmark trade deal with the EU. 25 years in the making, the EU-Mercosur deal creates a free-trade zone between the two regions. However, markets will not open overnight, but instead gradually open over six years, Duff noted.
Elsewhere, China imposed a new quota system on Brazilian beef to shore up its domestic markets. Brazil can export 1.1 million metric tons to China, with anything above that limit being tariffed at a steep rate, Duff explained. Additionally, Brazil capitalized on U.S. volatility to gain a foothold in Asia, but that dynamic could change if the U.S. rebounds, he added.
Brazil’s brewing farming crisis: Bankruptcies up, as margins tighten
Similar to the U.S. ag economy, Brazil is grappling with rising input costs and lower commodity prices, Duff explained. Additionally, Brazil’s benchmark interest rate is at 15%, compared to the U.S. rate of 3.5-3.75%, further suppressing farmers’ margins.
“The boom in grain prices is very much in the rearview mirror. ... In Brazil — with interest rates so high — anybody who leveraged themselves up excessively during those boom times is now left with operating margins that are back to normal or under some pressure, and at the same time, very hefty interest payments — high level of debt to deal with. And of course, it is no secret that we have seen the Chapter 11 requests in the agricultural sector move upwards because of that,” Duff said.
This comes as Brazil broke export records for its agricultural goods in 2025, including in soybeans and beef, as AgTechNavigator reported.
Soybean area is projected to grow 2% year-over-year in the 2025/2026 harvest and an output of 177 million metric tons for another record year, Rabobank projected. However, the 2% increase in soybean acres is under the 15-year expansion rate of 4% per year.
Additionally, a record soybean year could put downward pressure on local prices, further complicating margins.
What the 2026 Brazilian elections could mean for the ag sector
The 80-year-old Brazilian President, Luiz Inácio Lula da Silva, is seeking a fifth term in the 2026 general election, which could lead to more social spending and public investment, raising questions on Brazil’s debt-to-GDP ratio, Rabobank reported.
Additionally, fiscal spending could “end up with the exchange rate weakening, which maybe for exporters is not a big deal, but it also maybe means more domestic inflation,” Duff explained. Brazil’s inflation sits around 4.26%, close to the global average, but the country is leery about rising inflation, given a 1990 hyperinflation crisis.
