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March 6, 2015

Brazil Ag Sector slowly returning to Normal after Trucker Strike

Now that the 13-day truck driver strike has ended in Brazil, various industries in the ag sector are slowly returning to more normal operations, but it could take up to two weeks before everything is back to normal. That is if there are no more work stoppages in the future. Truckers ended their strike earlier this week as negotiations between the government and transportation organizations got underway in Brasilia. Protest leaders said it is possible that they may resume their strike on March 10th if the negotiations are not successful, but for now the traffic is moving normally in Brazil.

After reaching very low levels, soybean stocks at the various Brazilian ports are being rebuilt now that the truck drivers are back at work in Brazil. Port officials stated that it would take another week of normal deliveries to rebuild stocks to more comfortable levels at the ports. Grain loadings were not significantly impacted by the strike although there were reports of vessels being loaded slower than normal due to the low inventories. Brazil exported 0.87 million tons of soybeans during February, which was the lowest February total in four years.

One of the last areas where the protests lingered was at the port of Itajai in Santa Catarina, which is the principal port for poultry exports from Brazil. Protestors had blocked access to the port demanding higher rates for transporting containers to and from the port. The two week blockage resulted in off-site warehouses quickly filling to capacity with refrigerated containers loaded with poultry exports. Poultry processors such as JBS, which is the largest poultry exporter in the world, were forced to close their processing facilities due to a lack of birds and refrigerated storage space. All of JBS's processing facilities have since reopened.

Fuel deliveries were also interrupted during the strike. Fuel distributors in Mato Grosso indicated that it would take 10-15 days of normal delivers before the diesel supply in the state was back to normal. The fuel suppliers indicated that diesel is arriving in the state once again from Sao Paulo, but it might take up to two weeks to catch up on the backlog of farm deliveries.

Although there were a lot of stories in the press of farmers in Mato Grosso parking their combines because of a lack of fuel, the actual impact on the harvest progress in the state was minimal. Statewide, the soybean harvest in Mato Grosso is over 50% complete, advancing 19% last week, which was the peak of the trucker strike. Undoubtedly, there were a few farmers that ran out of fuel, but the overall impact on the harvest progress was minor.

Everyone in Brazil's ag sector is hoping that the ongoing negotiations in Brasilia are successful because they can ill afford another work stoppage. Livestock producers and dairy farmers were especially hard hit with losses in the hundreds of millions of dollars.