Brazil’s Agribusiness Resilience Amidst Challenges: A 2026 Outlook
Brazil’s agribusiness sector is showcasing remarkable resilience amidst various macroeconomic challenges. According to a recent outlook report by Rabobank, production for several key agricultural commodities in Brazil is poised to reach record levels by 2026.
Key Influences Shaping Brazil’s Agriculture
The Rabobank report emphasized four major themes currently influencing Brazil’s agricultural landscape: ongoing trade uncertainties, fluctuating prices of grains and feed, tightening farming margins, and potential volatility linked to the 2026 Brazilian elections.
In 2025, the Trump administration imposed a series of tariffs on Brazil, including an 18% reciprocal tariff, which former President Trump dubbed “Liberation Day” for the U.S. Following pressures from domestic stakeholders due to rising consumer prices, many of these tariffs were eventually lifted, particularly those affecting Brazilian coffee and beef imports. Andy Duff, regional manager for Rabobank, remarked that the U.S. found it difficult to source alternatives for Brazilian coffee, making a resolution necessary.
Strengthening Trade Ties with China and the EU
Brazil continues to strengthen its trade relationships, particularly with China and the European Union, which together constituted 32.7% and 14.9% of Brazil’s agricultural exports in 2025, according to Brazil’s Ministry of Agriculture and Livestock. A significant milestone was achieved when Brazil, along with Argentina, Paraguay, and Uruguay, entered into a landmark trade deal with the EU, which is set to gradually open over the next six years.
Conversely, China has instituted a new quota system on Brazilian beef imports, allowing 1.1 million metric tons while placing steep tariffs on any excess. According to Duff, Brazil has managed to leverage U.S. market volatility to establish a stronger presence in Asia, although this situation may evolve by 2026.
Challenges in Farming: Bankruptcies on the Rise
Similar to the agricultural landscape in the U.S., Brazil confronts rising input costs, lower commodity prices, and a benchmark interest rate of 15%. This financial environment has tightened profit margins for farmers, leading to increased bankruptcy filings in the agricultural sector. Duff noted that those who over-leveraged during the earlier spikes in grain prices are now struggling with substantial debt burdens alongside high-interest payments.
Despite breaking export records for agricultural products such as soybeans and beef in 2025, expectations for soybean production in the 2025/2026 harvest suggest only a 2% increase in cultivation area, well below the historical expansion rate of 4% per year. Furthermore, a record year in soybean production could exert downward pressure on local prices, further complicating profit margins.
Political Uncertainties Ahead of the 2026 Election
Ahead of the 2026 general election, President Luiz Inácio Lula da Silva, at 80 years old, is vying for a fifth term. This could potentially initiate increased social spending and public investment, raising concerns regarding Brazil’s debt-to-GDP ratio. While fiscal spending may provide short-term benefits for exporters, it could also lead to a weakening exchange rate and increased domestic inflation.
Currently, Brazil’s inflation is estimated at approximately 4.26%, which aligns closely with global averages. However, due to a historical precedent of hyperinflation in the 1990s, the country remains cautious about the implications of rising inflation rates.
