(Bloomberg) -- Fuel and food supplies across Brazil gradually resumed, while most agricultural trade remains stalled amid road blockades and escalating violence on the ninth straight day of a national trucker strike over gasoline and diesel costs.
Chicken producers got some feed deliveries after trucks loaded with corn were escorted by the police, according to export group ABPA. JBS SA, the world’s largest meat producer, said it is gradually resuming Brazilian operations.
Still, hundreds of blockades continued to prevent soybeans and sugar from reaching export terminals. In Santos, the nation’s main port, shipments remained stalled, and “chaos has been unavoidable,” terminal-operator group Sopesp said in an email. Workers at some sugar mills were attacked, and cane crops were burned, industry group Unica said.
Chinese food giant Cofco International suspended soybean shipments from Santos because of a short supplies, according to people with direct knowledge of the matter. Archer-Daniels-Midland Co., another major processor of soybeans, said on May 25 it had halted or slowed some operations after running out of storage.
All of Sao Paulo state’s sugar mills suspended operations amid a shortage of diesel needed to run plants, Unica said.
While many blockades ended and the government signed decrees aimed at getting truckers back to work, protests continued on Tuesday, and many businesses and public schools remained shut. Traffic remained obstructed in most parts of the country.
The impact on sugar and soybeans will probably be “short-lived,” said Warren Patterson, a commodity strategist at ING Groep NV. “The Brazilian government has already cut diesel prices in a bid to end the strike.”
Petrobras, the state-run oil company, is under pressure after the strike wreaked economic havoc. It’s unclear if the company will foot part of the the bill for fuel subsidies offered by the government to end the protests.
Brazil is the world’s top soybean exporter, and its supplies have assumed greater importance in recent weeks after China, the biggest buyer, threatened to impose tariffs on cargoes from the U.S., the second-largest shipper. Brazilian export delays may spur Chinese importers to ship more oilseeds from the U.S.
Brazil is home to the world’s largest sugar industry, and most of its mills have halted cane harvests amid a lack of fuel. “Countless blockades have been identified on highways and secondary roads that give access to the mills, preventing transportation of ethanol and sugar.” Unica said.
Copersucar, Brazil’s top sugar shipper, said Friday it may declare force majeure on some contracts because the strike has depleted inventories at its terminal at Santos.
Biosev SA, the Louis Dreyfus Co. unit that’s Brazil’s second-biggest sugar producer, said it suspended operations at two cane mills, and others would run out of fuel on Tuesday. Cane processing in the Center-South region may be cut by 10.9 million tons in the second half of May because of the strike, INTL FCStone Inc. said Monday in a report.
Last week, raw-sugar futures in New York jumped 6.9 percent, the most this year. The contract for July delivery closed unchanged on Tuesday at 12.46 cents a pound after climbing as much as 0.9 percent.
“Brazil’s sugar production might ultimately be little affected for the 2018 season,” said Tobin Gorey, a strategist at Commonwealth Bank of Australia. In the near term, “some of the chain of promises in the physical sugar market will not be fulfilled, and that generally creates a scramble to buy,” he said.
In Paranagua port, the second-largest in Brazil for grain shipments, five vessels that were supposed to carry about 300,000 tons of soybean meal haven’t been able to sail in the past seven days because of a supply shortfall, a press official from the port authority said Monday.
An additional three vessels slated to transport pulp and sugar were also stuck at the port because of a shortage of supplies. Soybean shipments from Paranagua weren’t affected amid sufficient inventory at port terminals.
Coffee shipments were halted at most port terminals, Nelson Carvalhaes, the president of export group CeCafe, said Monday. Plants that supply soybean oil, biodiesel and orange juice suspended operations because their warehouses were full.
Ethanol trading resumed Tuesday after a 10-day halt, though volumes were small, SCA Trading said.
JBS had halted domestic slaughtering of cattle, hogs and chickens because it couldn’t get products to customers or receive deliveries of feed, according to a person familiar with the matter.
“Beef production levels in Brazil are now close to zero,” Hyberville Neto, an analyst at Scot consultancy, said in a telephone interview. “The cattle market has been completely frozen since Thursday.”
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