Brazil grain buyers out of market for 3 weeks - trade
By Ana Mano
SAO PAULO, June 22 (Reuters) - Grain handlers have stopped
buying Brazilian corn and soy from local farmers for more than
three weeks as concerns over rising freight costs have frozen
the market for two of the country's main commodities, traders
told Reuters on Friday.
Brazil has recently finished harvesting its 2018 soybeans
and is now collecting its second corn crop in earnest.
The rise of freight prices is also disrupting pickup of
soybeans bought during April and May, when port premiums spiked
at the onset of a trade fight pitting the United States against
China, accelerating sales of Brazilian beans.
Concerns over transportation costs have led handlers in
Brazil to delay removal of products from farmers' warehouses to
avoid doing so at a loss, the traders said.
"The order is not to buy," a Mato Grosso-based trader told
"There have been no bids for corn or future soy for about 25
days," said a Paraná-based trader who also is not authorized to
speak to the media.
The problem is likely to persist until rules to set truck
freight prices are more clearly defined by the government, the
The situation increases operational risks to grain handlers
in Brazil, the world's largest soybean exporter and
second-largest corn exporter.
"At some point they will need to return to the market to
fulfill orders and honor take or pay contracts," one of
the traders said.
According to farmer-backed Mato Grosso research institute
IMEA, through last week Brazil's largest grain state had yet to
sell about 32 percent of this year's second corn.
Brazilian grain shipping costs rose sharply in the past few
weeks after the government imposed minimum prices for truck
freight. Such a measure followed a nationwide trucker protest
which virtually paralyzed the country's economy for 11 days last
month. The movement forced government to subsidize fuel and
impose minimum freight prices as part of the solution to lift
Chaos in Brazil's transportation sector and lower Chicago
grain prices due to the escalation of the global trade war also
caused Brazilian farmers to lose the opportunity to sell future
soy when the beans were quoted above $10 per bushel, the traders
"There is strong demand for Brazilian soy but our logistical
bottlenecks means farmers cannot take advantage," one of the
(Reporting by Ana Mano
Editing by Marguerita Choy)
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