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June 20, 2018

Livestock Producers in Brazil still feeling Impact of Truck Strike

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Livestock producers in southern Brazil continue to feel the impact of the recent truck driver strike in Brazil. When the strike was ongoing, they suffered tremendous loses because they could not transport their animals to the processing facilities, they could not get feed deliveries, they had to dump milk, processing facilities suspended operations, export contracts had to be renegotiated, etc. The entire sector suffered billions in loses.

Now that the strike has supposedly ended, an impasse over the new freight rates is still causing problems. Transportation companies have slowed grain hauling operations because they contend the new rates are illegal and they could drive up transportation costs as much as 150%. As a result, grain deliveries to the livestock producers in southern Brazil are also in jeopardy.

Southern Brazil is a grain deficient region that depends heavily on grain coming out of central Brazil, mainly Mato Grosso. The state of Santa Catarina for example, is the number one hog producing state in Brazil, but the farmers in the state only produce about half the amount of corn needed to support the livestock industry in the state. The situation is even more precarious this year due to the fact that farmers in southern Brazil reduced their full-season corn acreage and the safrinha corn production has been severely impacted by extended dry weather.

The full-season corn production accounts for approximately 30% of Brazil's corn production and it is used mainly for domestic livestock consumption. The safrinha corn crop accounts for approximately 70% of Brazil's corn production and it goes mainly into the export market.