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Weak road freights in Brazil anger truckers, benefit soybean crop
January 18, 2017 / 9:14 PM / 10 months ago

Weak road freights in Brazil anger truckers, benefit soybean crop

RONDONOPOLIS, Brazil, Jan 18 (Reuters) - Stiff competition among truckers will keep road freights in Brazil’s main agricultural belt stable during the 2016/17 crop, transporters said, benefiting farmers as they harvest a record volume of soybeans but hurting margins for logistics companies.

Drivers angry at the falling profitability of the route have staged protests and roadblocks in recent days at vital transport points in Mato Grosso, Brazil’s largest grain producer. Some blockades were cleared on Wednesday.

In Rondonópolis, a logistics hub in the south of Mato Grosso state, truckers gathered outside local freight agencies to search for deals. In recent days, it has been hard to find a happy face.

“What they are offering us barely pays the costs ... We feel discouraged,” said truck driver Mauri Jorge Dalbello, staring at freight rates written in marker on a white board.

Brazil expects to harvest a record 103.8-million-tonnes soybean crop this season and remain the world’s leading exporter, shipping 57 million tonnes in 2016/17, according to government estimates.

Mato Grosso farmers have already taken the lead in harvesting the crop, with volume expected to peak in late January and February.

While some output remains in silos, much hits the roads immediately to reach crushing facilities and ports on the coast.

Transportation of the harvest relies on trucks as Brazil’s railroad network is sparse despite the country’s vast size.

However, road freights are being pressured by the high availability of trucks, said Miguel Mendes, head of the cargo companies association in Mato Grosso.

Earlier this decade, the government stimulated truck purchases with subsidized loans. Over the past two years, Brazil’s worst recession on record has reduced demand from industry and trade, leaving more trucks available for agricultural shipments.

“Our situation could not be worse,” said Mendes. “The harvest has already started and freight rates are weakening.”

Local agencies estimate the 1,600-killometers freight between Rondonópolis and the southeastern port of Paranaguá at around 230 reais per tonne in February, down slightly from almost 240 reais in February 2016.

Over the past 12 months, however, diesel fuel prices have climbed by 3.1 percent in Mato Grosso, according to a National Petroleum Agency survey.

During the same period, road tolls have increased in many states, as have maintenance costs, in line with Brazil’s rate of inflation, which was running 6.3 percent in December.

Stagnant road freights should benefit farmers, as trading firms deduct transport costs from prices offered for grains.

“Freight prices may go up in February compared to January, as demand is higher, but the price peaks this year will be lower and last for a shorter time,” said Gelso Lauer, regional manager at Lontano cargo company. (Editing by Daniel Flynn; Editing by David Gregorio)

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