The opportunities in China
Latin American countries are keen on doing more business with China. Brazil's success in increasing soya exports to China is well known. Less well known are the problems Chile is having in maintaining its fruit exports to China.
Chile's fruit producers' association is annoyed that exports to China have been virtually halted since March. They say that the Chinese suddenly changed their fito-santiary requirements. China is not yet a major market for Chilean fruit exports, but the potential is huge. Chile reckons that the cost of the lost exports is only about US$5m. It points out, however, that as it was about to sign a new trade agreement with China, which would make selling cherries and citrus fruit to the country easier, exports are likely to rise sharply in the future.
The president of the fruit producers' association, Luis Schmidt, blames the problems on the government, for failing to appoint an ambassador to China. He said that the Chinese felt that they needed a proper interlocutor to sort out the difficulties and clinch the new deal. The last Chilean ambassador left in March and since then the Chilean foreign ministry has been mulling over three possible names to succeed him.
In 2000, China agreed to allow Chilean table grapes, apples and kiwi fruit into its market. The discovery of fruit flies last year led to the suspension of direct exports this season. Fruit is still exported via Hong Kong, but this increases costs and reduces demand.
Meat
Besides fruit, Chile also says that its exports of white meat to China have fallen because of the lack of a new trade agreement. The poultry producers' association says that it too is unable to export directly to China without an agreement covering fito-sanitary standards. Once that is in place the association reckons that it could quadruple its total exports, such is the likely demand from China. The poultry producers' association says that one of the great attractions of the Chinese market is that the Chinese will buy the chicken bits no one else wants, such as feet and wingtips. The Chinese are also interested in the more obscure cuts of pork. Currently, the Chileans sell about US$7m of white meat to China through Hong Kong. The entry port of preference is Shanghai.
Brazil
The Brazilians are probably the keenest of the Latin Americans on increasing their exports to China. Next month, October, they are sending yet another high powered commercial team to Asia. In the first eight months of the year, Brazil's exports to China were up by 133%. Its exports to Asia as a whole were up by 52%.
Brazil's main export to China is soya. Chinese demand will lift Brazilian soya exports to around US$8bn this year, overtaking the US, which export about US$7.2bn worth. Soya exports account for 12% of Brazil's total exports. In the first seven calendar months of the year, soya exports came to US$5.4bn, US$2bn more than for the same period of 2002.
Brazilian soya producers are rather pleased with the grumpy response their success is drawing from the US: the New York Times recently claimed that the surge in Brazilian soya was due to the devastation of Amazonia. The Brazilian soya industry reckons that the country will hang on to its international market and within the next five years overtake the US as the world's biggest soya producer.
In 2002/03 Brazil produced around 52mt of soya products. The US produced 78mt. In the 2003/04 season, Brazil, according to the most optimistic forecasts, is expecting to harvest 58mt.
World soya demand is running at around 174mt, the Confederação da Agricultura reckons. This is 7mt up on world demand in 2002. This increasing demand has had an effect on prices. Soya meal prices are up by 18% over the past year while soya oil prices are up by 34%.
Overall, the Brazilian grain crop is likely to weigh in at a record 125mt in 2004, the agriculture ministry forecasts. The 2003 harvest in likely to be around 123.7mt. The ministry reckons that the crop will increase next year because the government is increasing agricultural lending by 26%, to R$33bn (US$10.5bn).
China is also a major market for Brazil's cotton (see commodity briefs).
Oil
Latin American countries have high hopes for Chinese sales of other commodity exports, such as crude oil. Ecuador, which is starting, finally, to open up its oil industry, is interested in using Chinese capital to develop its oilfields. Its state-owned oil company, Petroecuador, has been negotiating a joint venture with Sinopec, a Chinese oil company, to develop the Culebra-Yulebra oilfield and the Cuyabueno-Sansahuari area for the past year-and-a-half. Sinopec is also, apparently, interested in secondary recovery from two of the country's key oilfields, Sacha and Shushufindi. It is not clear whether China wants Sinopec to take over projects which its other state oil company, the China National Petroleum Company (CNPC), has agreed to start. Traditionally, Sinopec and the CNPC get involved in different projects. The CNPC has already made bids to get involved in Culebra-Yulebra, Cuyabueno-Sansahuari and Shushufindi.
Sinopec's plan is to invest between US$150m and US$200m in a strategic alliance to develop the Culebra-Yulebra and Cuyabueno-Sansahuari fields as part of a strategic alliance. The Chinese reckon that it could take as long as six years for the fields to repay the initial investment.
Hitherto, the CNPC's main focus of oil exploration activity has been the Sudan in Africa. It has also invested in projects in Kazakhstan, Venezuela and Peru. Internationally, the CNPC is still pretty small: at the end of 2001 it claimed reserves of 30mt (200m barrels) of oil and 926bn cubic metres of gas. The CNPC focuses on secondary recovery projects. It has business relations with ExxonMobil, Agip, Shell, BP, Chevron Texaco and smaller companies such as Apache.
China has three main oil companies. Sinopec tends to specialise in upstream operations such as exploration and production. It also has operations in refining, petrochemicals and sales of processed products. It is exploring over 1.2m square km in China and has a presence in 38 countries in Europe, the Middle East, Canada and South America. It has reserves of 34.6mt of crude but 603.5bn cubic metres of gas.
Mercosul deal with China
Brazilian foreign minister Celso Amorim announced that Mercosul will start free-trade talks with China in October. He said that the move would be complementary to the World Trade Organization's faltering Doha Round, and that such deals build on Mercosul's links with southern hemisphere countries.
Brazil is particularly interested in bolstering its position as a supplier to China. The country is now Brazil's second-biggest export market and well ahead of traditional customers such as Argentina, the Netherlands and Germany. In the first seven months of the year, Brazil's total exports to China increased by 153%, to US$2.54bn. Brazilian imports from China were worth US$1.07bn, up 33% in the first seven months.
Chile's fruit producers' association is annoyed that exports to China have been virtually halted since March. They say that the Chinese suddenly changed their fito-santiary requirements. China is not yet a major market for Chilean fruit exports, but the potential is huge. Chile reckons that the cost of the lost exports is only about US$5m. It points out, however, that as it was about to sign a new trade agreement with China, which would make selling cherries and citrus fruit to the country easier, exports are likely to rise sharply in the future.
The president of the fruit producers' association, Luis Schmidt, blames the problems on the government, for failing to appoint an ambassador to China. He said that the Chinese felt that they needed a proper interlocutor to sort out the difficulties and clinch the new deal. The last Chilean ambassador left in March and since then the Chilean foreign ministry has been mulling over three possible names to succeed him.
In 2000, China agreed to allow Chilean table grapes, apples and kiwi fruit into its market. The discovery of fruit flies last year led to the suspension of direct exports this season. Fruit is still exported via Hong Kong, but this increases costs and reduces demand.
Meat
Besides fruit, Chile also says that its exports of white meat to China have fallen because of the lack of a new trade agreement. The poultry producers' association says that it too is unable to export directly to China without an agreement covering fito-sanitary standards. Once that is in place the association reckons that it could quadruple its total exports, such is the likely demand from China. The poultry producers' association says that one of the great attractions of the Chinese market is that the Chinese will buy the chicken bits no one else wants, such as feet and wingtips. The Chinese are also interested in the more obscure cuts of pork. Currently, the Chileans sell about US$7m of white meat to China through Hong Kong. The entry port of preference is Shanghai.
Brazil
The Brazilians are probably the keenest of the Latin Americans on increasing their exports to China. Next month, October, they are sending yet another high powered commercial team to Asia. In the first eight months of the year, Brazil's exports to China were up by 133%. Its exports to Asia as a whole were up by 52%.
Brazil's main export to China is soya. Chinese demand will lift Brazilian soya exports to around US$8bn this year, overtaking the US, which export about US$7.2bn worth. Soya exports account for 12% of Brazil's total exports. In the first seven calendar months of the year, soya exports came to US$5.4bn, US$2bn more than for the same period of 2002.
Brazilian soya producers are rather pleased with the grumpy response their success is drawing from the US: the New York Times recently claimed that the surge in Brazilian soya was due to the devastation of Amazonia. The Brazilian soya industry reckons that the country will hang on to its international market and within the next five years overtake the US as the world's biggest soya producer.
In 2002/03 Brazil produced around 52mt of soya products. The US produced 78mt. In the 2003/04 season, Brazil, according to the most optimistic forecasts, is expecting to harvest 58mt.
World soya demand is running at around 174mt, the Confederação da Agricultura reckons. This is 7mt up on world demand in 2002. This increasing demand has had an effect on prices. Soya meal prices are up by 18% over the past year while soya oil prices are up by 34%.
Overall, the Brazilian grain crop is likely to weigh in at a record 125mt in 2004, the agriculture ministry forecasts. The 2003 harvest in likely to be around 123.7mt. The ministry reckons that the crop will increase next year because the government is increasing agricultural lending by 26%, to R$33bn (US$10.5bn).
China is also a major market for Brazil's cotton (see commodity briefs).
Oil
Latin American countries have high hopes for Chinese sales of other commodity exports, such as crude oil. Ecuador, which is starting, finally, to open up its oil industry, is interested in using Chinese capital to develop its oilfields. Its state-owned oil company, Petroecuador, has been negotiating a joint venture with Sinopec, a Chinese oil company, to develop the Culebra-Yulebra oilfield and the Cuyabueno-Sansahuari area for the past year-and-a-half. Sinopec is also, apparently, interested in secondary recovery from two of the country's key oilfields, Sacha and Shushufindi. It is not clear whether China wants Sinopec to take over projects which its other state oil company, the China National Petroleum Company (CNPC), has agreed to start. Traditionally, Sinopec and the CNPC get involved in different projects. The CNPC has already made bids to get involved in Culebra-Yulebra, Cuyabueno-Sansahuari and Shushufindi.
Sinopec's plan is to invest between US$150m and US$200m in a strategic alliance to develop the Culebra-Yulebra and Cuyabueno-Sansahuari fields as part of a strategic alliance. The Chinese reckon that it could take as long as six years for the fields to repay the initial investment.
Hitherto, the CNPC's main focus of oil exploration activity has been the Sudan in Africa. It has also invested in projects in Kazakhstan, Venezuela and Peru. Internationally, the CNPC is still pretty small: at the end of 2001 it claimed reserves of 30mt (200m barrels) of oil and 926bn cubic metres of gas. The CNPC focuses on secondary recovery projects. It has business relations with ExxonMobil, Agip, Shell, BP, Chevron Texaco and smaller companies such as Apache.
China has three main oil companies. Sinopec tends to specialise in upstream operations such as exploration and production. It also has operations in refining, petrochemicals and sales of processed products. It is exploring over 1.2m square km in China and has a presence in 38 countries in Europe, the Middle East, Canada and South America. It has reserves of 34.6mt of crude but 603.5bn cubic metres of gas.
Mercosul deal with China
Brazilian foreign minister Celso Amorim announced that Mercosul will start free-trade talks with China in October. He said that the move would be complementary to the World Trade Organization's faltering Doha Round, and that such deals build on Mercosul's links with southern hemisphere countries.
Brazil is particularly interested in bolstering its position as a supplier to China. The country is now Brazil's second-biggest export market and well ahead of traditional customers such as Argentina, the Netherlands and Germany. In the first seven months of the year, Brazil's total exports to China increased by 153%, to US$2.54bn. Brazilian imports from China were worth US$1.07bn, up 33% in the first seven months.