March 24, 2020 / 4:19 PM / 2 months ago

UPDATE 3-Lockdown in second Brazil town may affect grain exports

(Adds Abiove statement)

By Ana Mano

SAO PAULO, March 24 (Reuters) - The key Brazilian farm town of Canarana has issued a decree aimed at curbing the spread of coronavirus that could disrupt grain export logistics and the operations of global agriculture commodities traders.

A municipal order dated Sunday bars shipping of grains out of the city in Mato Grosso state and comes as Mayor Fábio de Faria enforces a lockdown of all non-essential services to protect the population against the spread of the virus.

Canarana is the second major town in the heart of Brazil's farm country to issue coronavirus measures that will potentially impact global grain traders after Rondonópolis, also in Mato Grosso state. The Rondonópolis order threatens to close soy crushing facilities.

According to a document seen by Reuters, Canarana Mayor Faria and grain traders like U.S.-based Cargill, France's Louis Dreyfus and China's Cofco are discussing a 10-day grace period to comply with the order.

Faria told Reuters by telephone that the terms of the agreement were proposed by the grain handlers themselves, as their warehouses are full and space is needed to receive and store about 10% of the area's as-yet unharvested soybeans.

According to the document, Louis Dreyfus would be able to ship some 15,000 tonnes from Canarana, Cofco 5,000 tonnes and Cargill 3,000 tonnes.

Canarana is in the peak of its soy harvest and some 2,000 truckers are bound for the town to haul away the crop, the mayor said.

The decree aims to protect all persons involved in the farm trade from contagion, and 10 days would probably suffice to get most of the grains out of the town, he said.

"The traders said once these volumes are shipped out, there is no big rush to remove what's left," Faria said. The agreement will be signed after traders' lawyers give their permission, he added.

The traders concerned did not respond to requests for comment.

Abiove, an association representing oilseeds crushers, said under presidential decree, inputs for food production and fuel are considered essential items that should be allowed to be produced, stored and shipped during the coronavirus outbreak.

A Canarana farmer told Reuters on Tuesday that warehouses in the area were still receiving grains normally despite the order, which the mayor confirmed.

The farmer said if shipments stop, the local farm lobby may resort to the courts.

Farmers who sold grain on the futures market are worried about their sales commitments and traders' ability to export.

"We can't just leave ships waiting," the farmer said. (Reporting by Ana Mano Editing by Sandra Maler, Cynthia Osterman and Sonya Hepinstall)

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