Brazil's new Freight Law is disrupting trade in grain and oilseeds

Food producer and commodities trader Cargill said yesterday in Brazil that the country's freight cost policy has a significant impact on the grain trade and drives down the cost of the world's largest soybean producer.
The new freight regulations in Latin America hinder the pre-sales of grain and worsen the efficiency of the entire transport system.
They provide that now only a minimum freight rate is prescribed. The forwarders had enforced this in a nationwide strike in May. The grain dealers complain that the freight rates are set too high.
The exporters now have to consider how they want to trade in Brazil in the future, because the changes are disrupting the supply chain and the confidence in a sustainable expansion of the agribusiness.
Traders and processors can not commit to buying grain in the ports or their facilities and leaving the transport business to farmers or cooperatives. That would be like buying grain from the farm. The commodity traders would be forced to maintain their own shipping companies to control the costs.
This would mean that there is an oversupply of freight capacity and that the freight forwarding industry is not doing well.
The revision of the Brazilian freight market was approved by Congress this month and is now available to President Temer for signature before it becomes law.
The Federal Court of Justice is still examining the legality of fixed freight rates, which have already been criticized by the antitrust authorities.
Text: HANSA Derivatives Trading GmbH /

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