Two weeks on from a truck strike that crippled the country, Brazilian trade in soybeans is still struggling to return to normal on business market. Today in the normally active paper, Paranagua market stalled as buyers and sellers decipher how much freight will cost them. Agreeing minimum freight rates was a key promise made by Brazil’s government to unlock a dispute with truck driver unions over rising diesel costs and free up the roads to get the economy moving.
However, a double U-turn by the government – first in appearing to cut the minimum freight rates, then only to install them again subject to consultation, is starting to impact forward trade in soybeans. According to Port´s commercial department, since the start of June under 40,000 MT have traded a day on average in the Paranagua paper market – that is around half the volume that traded on average in the first few days of May.
“It shouldn’t have affected it that way but it actually did because of all the uncertainty on how things would move at the ports. The physical situation has ended up affecting the market as brokers say, and the delays are not just hampering forward sales, loadings are being impacted too.
On Tuesday afternoon, Agriculture Minister Mr Blairo Maggi told reporters in Brasilia that delays for exports are now standing at 11 days, but in our local view, it goes over 20 days. According to Mr., Blairo there are a lot of products waiting for transportation. Producers should be moving 450,000 tonnes of goods to ports every day, but they are hampered because of present situation…
A Brazilian newspaper released a note saying that the Brazilian government show loading rates for soybeans are down 30% in June on May’s record export figure, which in itself was hit due to the strike. The National Association of Cereal Exporters estimates there are 10 million MT of soybeans stuck in the interior and 50 soybean vessels waiting to be loaded off Brazil’s coast – with logistics paralysed by uncertainty over truck rates.
An international news agency reported late Tuesday rumours that the government, which is still officially consulting on the minimum freight tariffs for trucks, may be willing to tear up proposals for price intervention and let the market decide prices. We did not see any press release in this respect in Brazil. However, that could not be confirmed. In terms of cargo trade, much of the focus has agreeing deals for next year’s crop as opposed to delivery for this year’s harvest – of which 28% of the crop still needs to be sold.
