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March 25, 2020

Virus Threat leads to Uncertainty of Grain Transport in Brazil

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

The state of Mato Grosso is the largest producer of soybeans, corn, cotton, and cattle in Brazil and the Governor of the State declared a state of emergency on Tuesday, March 24th for a period of 90 days due to the spread of the coronavirus. Included in his decree was the prohibition of gatherings, closing of bars, closing of restaurants except for carryout, closing of non-essential businesses, and a suspension of transport between municipalities. The decree will be in place for three months with the possibility of an extension for an additional three months.

As of this writing, it is not clear if the transport suspension includes grain trucks, livestock haulers, etc. The Brazilian Minister of Infrastructure is coordinating with governors to insure that road freight transport will not be interrupted and that ports and airports remain open. The government is also trying to insure that individual cities or groups don't institute their own roadblocks. If by some chance the movement of grain trucks is prohibited, it could result in a major disruption of Brazil's grain trade just as soybean exports start to ramp up.

There have been other development in the state of Mato Grosso as well including the mayor of the city of Rondonopolis ordering the closing of industrial facilities in the city which includes three soybean crushing plants operated by ADM, Bunge, and Cofco as well as a Cargill cotton facility.

The city of Rondonopolis also has the largest grain terminal in Latin America, which is connected to the Port of Santos by a railroad operated by Rumo. If that grain terminal is closed for an extended period of time and trains are not allowed to transport grain, the grain silos will quickly fill to capacity and the grain transportation system in the state will be severely impacted.

Individual cities in Mato Grosso such as the city of Canarana, which is located in eastern Mato Grosso, have decreed that trucks are not allowed to haul grain out of the city. It is unclear if the state or federal government will overrule these types of decrees.