The Brazil–Türkiye Cattle Corridor · Article 3

2027/28 Outlook: When Three Crises Arrive at the Same Time

How the convergence of El Niño, fertiliser scarcity, and a Brazilian credit crunch will test every operator in the corridor.

This third article in the Brazil–Türkiye cattle corridor series looks forward to 2027 and 2028, and considers what happens when a market already under significant pressure must deal simultaneously with an extreme El Niño and a fertiliser market that is not expected to normalise before 2028. 

The first article in this series described a corridor governed by state quotas and a single buyer, ESK (Et ve Süt Kurumu), with Turkish importers structurally dependent on Brazilian cattle. The second showed how the Strait of Hormuz closure and the Russia–China fertiliser squeeze transformed that predictable trade into a high-volatility, margin-squeezed business. This third article considers the added complexity of climate change and examines the exponential impact that may have. 

THE EL NIÑO  

In April 2026, the FAO (Food and Agriculture Organization of the United Nations) and the World Meteorological Organisation issued a landmark joint warning that extreme heat has become the defining threat to global food security, threatening the livelihoods of more than one billion people. The parameters are specific given that crop yields begin declining above 30°C, and livestock experience heat stress above 25°C. In Brazil, El Niño’s impact is asymmetric: excessive rainfall and flooding in the South, reduced rainfall and pasture degradation in the North and Northeast. Both extremes damage Brazilian agriculture.

The ‘Godzilla’ label which was first applied to the record 2015/2016 El Niño event, has reentered the scientific and media conversation precisely because the current trajectory is tracking toward a similar configuration. Whether this event ultimately qualifies for that distinction will become clear by late 2026. What is already clear is that the worst agricultural consequences will arrive in 2027, regardless of whether the peak is moderate or extreme.

A FERTILISER MARKET STRUCTURALLY TIGHTER THAN 2022

The Strait of Hormuz closure and Russian–Chinese export restrictions described in the second article have not been completely resolved despite the recent peace talks. According to the April 2026 NDSU (North Dakota State University) Agricultural Trade Monitor, even under the most optimistic assumptions with a prompt reopening of the strait, fertiliser prices will remain well above pre-crisis levels, with a return to normal conditions unlikely before 2028. Under the more severe ‘Extended Conflict’ scenario, urea is expected to approach US$1,000 per short ton a near historical high.

Brazil’s exposure is severe. The country imports approximately 85% of all the fertilisers it consumes, 90% of its nitrogen, 96% of its potash, and 80% of its phosphates. The CNA (Brazilian Confederation of Agriculture and Livestock) has warned publicly that urea prices which are already up more than 60%, could force reductions in planted area or in the technological package applied to crop cultivation.

The Government and the private sector have responded through a combination of public financing and research-led industrial policy.

The Brazilian Development Bank (BNDES), which provides subsidised government-backed loans to strategic industries has provided R$15 billion (USD$ 2,883 billion) in credit under the Brasil Soberano 2 programme (a federal initiative offering subsidised financing to boost domestic fertiliser production and reduce reliance on imports).

In 2026 the government also allocated R$50 million (roughly USD 10 million) to the Centre of Excellence for Fertiliser and Plant Nutrition (CEFENP), a public-private hub designed to accelerate the commercialisation of fertiliser technologies developed in Brazil. Its importance lies partly in the institutions it brings together: private companies, universities, and Embrapa (Brazil’s state-owned agricultural research corporation). The research carried out by CEFENP has played a central role in the country’s agricultural expansion. By linking Embrapa’s research capacity with private-sector production and university expertise, CEFENP is intended to bridge the gap between laboratory research and market-ready fertiliser products. These initiatives are significant, but the transition to meaningful self-sufficiency will take years and in the meantime Brazil will continue to be exposed.

THE BRAZILIAN CREDIT SYSTEM: ALREADY STRETCHED

Farmers are postponing investments, migrating to more expensive free-market credit lines, and/or reducing their planted area. The CNA describes the current moment as ‘one of the most critical periods for the sector in recent years,’ with high input costs, elevated interest rates, credit restrictions, and climate risk all converging simultaneously.

The Government has responded with a proposed renegotiation and restructuring of R$81.7 billion (USD$15.7 billion) of debt owed by farmers alongside the CNA’s request for a record R$623 billion (USD$119.5 billion) in rural credit for the 2026/27 crop plan. These are meaningful interventions. Brazilian farmers need financing now, to be able to plant under an uncertain climate outlook and to survive if El Niño reduces yields below break-even levels. A credit system with a default rate of almost 14% has limited capacity to absorb a second shock.

HOW TO PREPARE — A STRATEGIC VIEW

The corridor will not close. Turkey needs the cattle; Brazil needs the export revenue. But the margin for error that once characterised this trade has effectively disappeared. The operators who come through the 2027–2028 period will be those who act before the full cost of these converging crises is priced into the market.

For Turkish importers working through ESK: the immediate risk is rising cattle prices driven by feed costs that are outside their direct control. Hedging corn and soybean exposure for 12 to 18 months and building cash reserves to absorb margin compression that ESK’s liradenominated sale prices may not fully offset, are the most urgent priorities. Reviewing force majeure and price escalation clauses in existing contracts is an operational necessity not a precaution.

For Brazilian exporters the window to lock in forward contracts before El Niño is fully priced into the market is narrowing. Feed efficiency, futures and options on corn and soybeans, and close monitoring of Russian and Chinese fertiliser policy have moved from risk management “best practices” to core operational requirements. Any exporter not tracking these variables weekly is operating with incomplete information.

For new entrants to the corridor the entry window at a competitive cost is closing. Turkish companies not yet registered with ESK and Brazilian farms not yet SIF (Federal Inspection Service) certified or SISBOV (Brazilian System for Individual Identification of Cattle and Buffaloes) registered, should treat compliance as an immediate priority. Without these institutional credentials, access to the corridor is simply unavailable and there is no alternative route.

CONCLUSION

The first article described a functional, state-managed trade route. The second article examined how external shocks made it volatile and expensive. This third article makes the case that the next two years will be the corridor’s most demanding test as three key external factors are converging at the same time. 

The climate has changed. The fertiliser market has changed. The credit system has changed. The operators who come through this period will not necessarily be those with the most capital or the longest track records. They will be those who read the signals early, acted on incomplete information, and built systems capable of absorbing variance.

The question is no longer whether the corridor will survive. It is who will survive within it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.