www.research.hsbc.comDisclosures&Disclaimer:ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.Equities&EconomicsAgribusinessFebruary2020By:AlexandreFalcao,SanthoshSeshadri,AndyLi,ShanellaRajanayagamandAugustoEnsikiGlobalAgribusinessUS-ChinatradedealplaybookPhaseItradedealisaboutmorethanpurchasetargets;couldpotentiallyimpactsectors,tradeflowsandeconomiesChinacouldbuyabouttwo-thirdsofitspromisedtargetofUSagproductsin2020,butcoronaviruscouldbeawildcardUSfarmproductslikelytobebiggestbeneficiariesofthedeal;Brazilatadisadvantage1Equities&Economics●AgribusinessFebruary2020Executivesummary4Tradedealisaboutmorethanpurchasecommitments4USagproductslikelythebiggestbeneficiaries4China’scommitmentsunlikelytocrowdoutothertradingpartners5CanChinahonoritspurchasecommitments?5Whatarethepossible‘marketconditions’andtheirimplications?6ImplicationsonUScropandcrop-inputmarkets6Brazilagribusinessisatadisadvantage7ImplicationsforChinaagribusiness7Agriculturaltradeincharts8USChinatradedeal10Impactontradeflows10Impactongrainsmarket13Possible‘marketconditions’andtheirimplicationsonagpurchases15ImpactonBrazilianexportsandtransportation15Impactonfertilizers16ImpactonChina’sagribusiness17Valuationandrisks18Disclosureappendix21Disclaimer24ContentsTHISCONTENTMAYNOTBEDISTRIBUTEDTOMAINLANDCHINAEquities&Economics●AgribusinessFebruary20202Agriculturaltradeflow–Chinavstheworld(USDbn)Source:UNComtrade(2018values)Soybeans(7.1)Fish&crustaceans(1.1)Grains(0.9)Fruits,Nuts(0.8)Meat(0.5)Animalfodder,Residue,wastesoffood(0.5)Beverages,spiritsandvinegar(0.4)Dairy(0.3)Fatproductsexceptedibleoil(0.3)Meat(2.8)Soybeans(28.8)Cerealfood,flour,starch(3.4)Beverages,spiritsandvinegar(2.9)Meat(1.6)Fish&crustaceans(0.3)Oilseeds(exceptsoybean)(2.3)Fish&crustaceans(0.9)Grains(0.9)Soybeans(0.8)Ediblevegetablesandcertainroots,tubers(0.6)Animalfodder,Residue,wastesoffood(0.5)Meat(0.5)Brazil32.6EU(ex.UK)11.4US14.2Canada(7.7)NewZealand(6.7...
