Latin American Agriculture and Automotive Industries: Current & Future Market Outlooks

Latin America is a key player in the global agricultural and automotive markets, and Brazil and Mexico play particularly large roles in shaping the direction of these industries. This makes it crucial for businesses in Latin America to understand current market trends, as well as future outlooks. Read more to explore some of the challenges that these industries are facing and learn about how Leeco Trading is helping businesses navigate these challenges.

This article is an excerpt of video content in Leeco Trading’s “Before the Barge: International Trading Insights” video series. Watch the full video here.

Latin America’s Agriculture Market

First, we will discuss Latin America’s agricultural market, specifically looking at market conditions in Brazil and Mexico.

Brazil is one of the largest agricultural exporters in the world, feeding roughly 1 billion people per year. In addition to soybean and sugar, Brazil is a top global exporter of several key agricultural items, outlined in the chart below.

Of these exports, Brazil ranks as first in production for soybean and sugar. Brazil is also a top producer of several other products, shown below.

Latin American Agriculture Market Outlooks and Projections

Brazil’s agricultural exports are expected to grow significantly over the next decade, with 2029/2030 projections showing Brazil growing its worldwide export share in sugar, cotton and other core goods.

Additionally, agricultural production in Brazil is expected to rise over the next decade. Grain tonnage is projected to increase from 250.9 tons per million in 2019/2020 to 318.3 tons per million by 2029/2030, while meat is projected to grow from 28.2 tons per million in 2019/2020 to 34.9 tons per million in 2029/2030, according to the World Trade Organization.

Mexico is also a growing player in the global agricultural market. Agricultural exports reached a record breaking $50.1 billion in 2022, up from $44.7 billion in 2021, according to the Mexican Ministry of Agriculture and Rural Development (SADER).  To further support its agricultural and exportation efforts, Mexico recently received agricultural investments from the U.S. Through these investments, Mexico’s GDP from agriculture is expected to grow from $54.5 billion dollars in 2023 to $63.37 billion dollars in 2028, according to Statista.

Fertilizer Supply Chain Challenges

The Russia-Ukraine war created a fertilizer shortage, which disrupted the global fertilizer supply chain and made it difficult for Latin American farmers to source the fertilizer products they need.

Due to this conflict, many countries placed economic sanctions against Russia, who was the top exporter of fertilizer in 2022, according to data from Statista. With Brazil being the fourth largest importer of fertilizer in the world, these sanctions prompted Brazilian farmers to source from alternate countries.

In an effort to increase fertilizer production and offset shortages created by the Russia-Ukraine war, UN Members pledged to increase fertilizer production according to the U.S. Department of State. This pledge is expected to alleviate fertilizer shortages over the next year.

New Technology to Help Offset Fertilizer Sourcing Challenges

Due to supply chain disruptions and shortages, fertilizer pricing was at a historic high in 2022. Many farmers sought to offset this problem by growing different crops (ex. soybean instead of corn) or reducing total acreage planted of existing crops, which led to a lower available supply of agricultural products. The reduced use of fertilizer is also expected to reduce crop quality, increasing the risk of substandard products and food waste.

To help farmers navigate supply chain challenges and continue growing high quality crops, Leeco Trading has partnered with a fertilizer machine manufacturer and is an authorized seller of these machines in Latin America.

In addition to minimizing supply chain risk by allowing for onsite production, these fertilizer machines provide other benefits to farmers, including:

• The machine runs on water and electricity to operate, which reduces carbon emitted from ammonia production.
• The machine measures 20’ long, making it easy to store.
• One 20’ long container makes four tons of ammonia which then becomes sixteen tons of ammonium.
• The containers can be stacked one over the other for easier storage and to scale up production.

Contact Leeco Trading to learn more about our fertilizer machines.

Latin America’s Automotive Market

Now that we have reviewed Latin America’s agricultural industry, we will discuss current market conditions of Latin America’s automotive industry, focusing on the region’s two largest producers: Mexico and Brazil.

Historically, Mexico produced about four million cars per year, while Brazil produced roughly two million cars per year.

However, following the COVID pandemic, Mexico’s automobile production significantly increased. Mexico became a key automobile trading partner with the U.S. as businesses moved operations back to North America to minimize supply chain disruptions. In 2021, Mexico exported more than $41.5 billion of cars, accounting for 5.74% of the global export share. Brazil was also a major player in the automobile market, exporting $3.4 billion of cars in 2021, which accounted for 0.47% of the global export share.

Government Intervention to Increase Auto Production

Brazil and Mexico’s governments have both taken measures to increase car production. Brazil, for example, is cutting taxes on automotive purchases as an incentive for consumers to buy domestically produced vehicles. Brazil is also providing funding to the automotive sector to help bolster production.

The Mexican government has taken similar actions to encourage the purchase of domestically produced vehicles and boost auto production. Mexico is also receiving investments from the U.S. to increase automotive production.

Leeco Trading’s Efforts to Support Growing Automotive Markets

To support the growth of automotive markets in Mexico and Brazil, Leeco Trading partnered with the world’s largest producer of aluminum wheels and can readily supply these products to Brazil, Mexico and other Latin American countries. These products will help manufacturers control production costs while facing a growing market.

Quality is a key concern when importing materials, which is why Leeco Trading partnered with a supplier whose wheels met INMETRO standards to ensure manufacturers receive high quality products.

Contact Leeco Trading to learn more about our aluminum wheel offerings.

Choosing an International Trading Partner

Having the right partner for your international trading needs is essential in ensuring you can successfully import high-quality fertilizer and automobile wheel products. To select an international trading company that fits your sourcing needs, you should look for companies who have the following:

• Expertise. Having a knowledgeable partner is crucial in navigating supply chain issues. Leeco Trading, for example, has over six decades of combined experience in international trade and can help customers successfully navigate challenges as they arise.
• Logistical Capabilities. Look for a partner who can assist with the logistics of your international trading order. Leeco Trading handles order logistics from port to port, reducing the amount of time spent on material procurement.
• Quality. Quality can be a concern when importing raw materials, as the materials are not seen before they are shipped. Leeco Trading provides materials that are inspected and certified to meet the necessary quality standards.

For more factors to consider, read our article on choosing an international trading company.

Contact Leeco Trading today to receive a quote for your next project.