July 24, 2018 / 8:27 PM / 5 months ago

U.S-China trade spat to boost revenues at Brazil's No.1 farm coop

SAO PAULO, July 24 (Reuters) - Coamo Agroindustrial Cooperativa, Brazil’s largest farm cooperative, expects to increase its revenues by 35 percent in 2018 to 15 billion reais ($4.01 billion), mainly as a result of the trade spat between the United States and China.

Coamo Chief Executive José Aroldo Gallassini told Reuters late on Tuesday that the move by China to slap a 25 percent additional import tax on U.S. soybeans boosted prices for Brazilian soy and led farmers to sell whatever they have left.

A weakening of the Brazilian currency in recent months has also increased returns in reais for local farmers, Gallassini said. “Soy prices reached up to 80 reais per bag (60 kg). Last year some of it was sold for 60, another part for 70 reais,” he said.

“This price (80 reais) is very good considering production costs. Our recommendation to associated farmers is for them to sell,” he added.

Coamo is headquartered in Campo Mourão, in southern Paraná state, one of the leading agricultural regions in Brazil and one that uses high technology on equipment and inputs.

It has 28,000 associated farmers in Paraná and the neighboring states of Mato Grosso do Sul and Santa Catarina. Coamo received 7.66 million tonnes of grains from its farmers in 2017. The expectation of higher revenues in 2018 comes despite a possible smaller corn volume since output from the second corn crop is expected to fall 30-35 percent due to drought.

Gallassini says Coamo farmers have sold forward around 15 percent of the 2018/19 soy crop that they will plant beginning in September, a volume above historical levels, taking the opportunity to clinch sales at good prices.

FREIGHT CRISIS

Coamo’s head said the coop was less affected by the recent hike on road freight prices than others in the commodities sector in Brazil because it has its own truck fleet to move grains and other goods.

U.S.-based commodities trader Cargill Inc on Tuesday criticized the new truck freight policy in Brazil, saying it would raise operational costs.

“We have 780 trucks and we just bought 151 more,” Gallassini said. The coop has its own terminals at the Paranagua port, Brazil’s second largest export hub, located 570 km (350 miles) from Coamo’s headquarters in Campo Mourão. ($1 = 3.7423 reais) (Writing by Marcelo Teixeira; editing by Jonathan Oatis)

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