Global commodity trading landscape shifting away from U.S. dollar

LITTLE ROCK — The global trading landscape is shifting as Brazil, Russia, India, China and South Africa — along with countries in the Middle East and Southeast Asia — create their own trading bloc which will have implications for global competitiveness of soybeans, rice and cotton from the United States.
With the recent inclusion of Egypt, Ethiopia, Iran, the United Arab Emirates and Indonesia, what’s known BRICS+ aims to “leverage the increase in their combined gross domestic product, or GDP, and global share in commodity production and trade to reduce its reliance on the U.S. dollar,” said Ryan Loy, extension agricultural economist with the University of Arkansas System Division of Agriculture.
Ryan Loy, extension ag economist and assistant professor, talks about efforts by the BRICS+ coalition to de-dollarize the global economy. (U of A System Division of Agriculture photo by Mary Hightower)
“What those countries produce altogether accounts for about 25 percent of the global world output,” he said. “The combined GDP now is nearly exactly the same as that of the United States, which has really steadily lost GDP share since about 2000.”
Of particular interest to the U.S. and Arkansas is that the BRICS+ nations “combined currently produce about 44 percent of the world’s grain, 33 percent of the total wheat and rice exports in the world, and about 25 percent of the global corn exports,” Loy said.
“Currently, a significant portion of international debt instruments are issued in U.S. dollars and must be repaid in U.S. dollars, and a majority of global trades are settled in U.S. dollars,” Loy said. “What they’re trying to do is remove the U.S. dollar as the global standard and safe-haven currency.”
Built on Brazil
One BRICS+ member in particular — Brazil — has risen as a rival to U.S. agriculture, aided by infrastructure improvements and other help from both China and Russia. Brazil is the major competitor for U.S. soybeans imported by China and recently, “they just overtook us in cotton,” Loy said. “In 2008, the United States had about 44 percent of the global cotton share.”
In 2024, the U.S. share of the world cotton trade had shrunk to 26 percent, while Brazil surged to 30 percent.
Brazil’s agricultural strength is the key. “This BRICS idea doesn’t work without Brazil,” he said.
Debt trap diplomacy
To move away from the dollar, China has been increasing its gold reserves, “but the only reason they’re really able to do this is because they have a partner in this coalition that can produce all these hard commodities cheaply, effectively.”
In the wake of the United States’ 2018 trade war with China and the effects of the pandemic,
“China has reduced its reliance on U.S.-grown commodities and shifted its focus and investment towards Brazil,” Loy said.

“Brazil has now become China’s leading partner for soybeans and corn, and the U.S. is going to struggle to regain that market share due to the geopolitical relationship that exists,” he said.
In addition to being Brazil’s customer, China has also “sent billions of dollars’ worth of infrastructure improvements to Brazil,” Loy said. “They’re trying to create that old Silk Road again, to make trade easy.”
However, Brazil would do well to avoid what could be seen as China’s “debt trap diplomacy.”
China has invested heavily in Sri Lanka, a country that defaulted on its foreign loans in 2022. In late 2023, the island nation reached an agreement with the Export-Import Bank of China to restructure its $4.2 billion in debt.
“That could easily happen in South America,” Loy said.
For the U.S., managing inflation and adjusting the U.S. money supply remains critical for economic stability.
“Tariffs are a significant part of this balance,” he said.
Rice rollercoaster
Thanks to India, BRICS+ is also a player in the rice market.
“India is the world’s leading exporter of rice,” Loy said, noting that the country put the brakes on exports in an effort to ensure domestic supplies of the staple grain. “The world price for rice went up because supply dwindled, but now that India has come back into the game, it’s really a rollercoaster of prices for rice.”
Arkansas grows more rice than any state in the nation, including half of the national long-grain rice. Domestic long-grain rice exports, however, have dipped about 7 percent over the past 15 years. About 43 percent of the long-grain rice grown in the U.S. was exported last year, down from 50 percent in 2010.
Market shift
Russian fuel, fertilizers, and wheat have smaller, indirect effects on the U.S. However, Russia has invested a significant amount in Brazil’s energy and mining sectors and is now shifting its focus to infrastructure, specifically fertilizer companies, Loy said.
“The bottom line is that the emergence of the BRICS+ trading bloc has the potential to diminish demand for Arkansas and U.S. exports,” he said. “This shift may continue the trajectory of lower commodity prices and increased competition, which would pose severe economic challenges for Arkansas farmers that are already price squeezed from rising input costs.”