News
30/12/25
Viewpoint: Brazil freight rates rise on record soy crop
Viewpoint: Brazil freight rates rise on record soy crop
Sao Paulo, 30 December (Argus) — Road freight rates for grains and fertilizers
may rise in 2026, as a record 2025-26 soybean crop boosts trucking demand in the
first quarter, with many areas being harvested simultaneously. Brazil's grain
freight rates remained high during 2025, with record soybean and corn production
throughout the 2024-25 cycle, contributing to above-average freight rates
compared to 2024. On the Sorriso-Miritituba stretch, freight rates averaged
around 12pc above 2024 levels, while on the Rondonopolis-Santos route the
increase was around 6pc. Freight rates are also likely to rise as fertilizers
are transported for the second 2025-26 corn crop in May. In the export market,
especially for soybeans, trade tensions between China and the US led the Asian
country to turn to Brazilian oilseeds to meet demand. This extended Brazil's
export window and resulted in constant demand for road transport services. For
2026, with Brazil likely to see record-high soybean output in the 2025-26 cycle,
greater demand for transportation services in export corridors is expected,
which may also result in higher freight rates. National supply company Conab
projects that Brazil will produce 177.6mn metric tonnes (t) of soybeans in the
2025-26 cycle, an increase of almost 3.6pc compared to the previous season and
the largest on record, according to the second official estimate for the cycle.
Central-western Mato Grosso state — Brazil's largest producer — could harvest
47.2mn t of soybeans in the 2025-26 cycle, according to the state's institute of
agricultural economics (Imea). That would be 7.3pc behind 2024-25 production,
but still the second largest in the state's history. Overall, the planting pace
for the 2025-26 cycle proceeded without major problems. Planting registered a
surge in progress throughout October. In the first four weeks of planting,
planting reached 21.2pc of the nearly 13mn hectares (ha) expected for the cycle
by 10 October. However, planting advanced by 54.9 percentage points across the
month, totaling 76.1pc by 31 October. More than half of Mato Grosso's soybean
area was planted during the same period. This raises concerns among market
participants about high competition for transportation in export corridors and
availability of vehicles, resulting in a logistical bottleneck, since the
harvest of these areas must also occur at the same time. Climate issues remain
on the radar. Accumulated rainfall in Mato Grosso during November reduced water
stress and favored crop development. But rainfall remained irregular in other
regions, a situation that could harm the state's productivity. This could also
affect the corn planting window and its harvest in the second half of 2026.
Although Brazil expects significant corn production, the domestic market has
been absorbing most of the grain volume, exceeding exports. This should result
in lower grain freight rates during this period, with a good portion being
destined to meet the needs of Brazilian industry. Corn ethanol production in
Brazil is expected to total 8.7bn litres (l) in the 2025-26 cycle, an increase
of 11pc compared to the 7.8bn l produced in the previous cycle. Conab projects
that 1t of corn can produce around 400l of ethanol, which means that
approximately 21.8mn t of corn will be consumed by the ethanol industry, up from
18mn t a year prior. Fertilizer freight rates likely to rise Fertilizer
transportation may also face logistical bottlenecks while moving inputs from
ports inland due to the slow pace of fertilizer purchases, especially nitrogen
fertilizers, for the second 2025-26 corn crop. The national land transport
agency's (ANTT) minimum freight rate table also adds challenges to the logistics
market. Since October, compliance with the minimum freight rate is monitored
automatically, based on information entered in a mandatory electronic tax
manifest (MDF-e) issued by the party that hires the truck driver, such as
carriers. This gathers information from several invoices related to the cargo
transport, facilitating tax inspection and logistics management. The system
cross-checks data declared in the MDF-e with the official minimum freight rate
table. If the reported value is below the legal limit, the system will identify
the irregularity without requiring an additional report or inspection. The new
automatic compliance system led to increases in fertilizers road freight rates
of up to 70pc on some of the 31 routes monitored weekly by Argus . Subsequently,
freight rates decreased slightly during the year, with some carriers
disregarding the table and reducing profit margins in a bid to offer competitive
prices. In addition, demand for vehicles with a greater number of axles has
skyrocketed. Under the new regulations, seven-axle trucks are deemed less
efficient and cost-effective than nine-axle trucks, the supply of which is more
limited. Deliveries of nitrogen-based fertilizers, especially urea and ammonium
sulphate (AS), will likely increase competition for vehicles in the first
quarter of 2026, especially in January, when the supply of trucks is reduced due
to drivers heading home for end-of-year festivities. Under these circumstances,
higher fertilizer freight rates and higher costs for road logistics are
expected. Brazilian importers have been exchanging urea for AS, which offered
during most of 2025 a more attractive nitrogen price. However, twice the volume
of AS is required compared to urea for an equivalent amount of nitrogen, as urea
has 46pc nitrogen and AS has 21pc, which adds to logistical and operational
costs. The availability of sufficient trucks has been a concern this year,
hindering inland transport. ANTT's new electronic inspection system of minimum
freight rate table, in effect since October, remains an important market driver
and resulted in a significant increase in road logistics costs. But this matter
is surrounded by legal uncertainty as a state court decision suspending fines in
some regions has not curbed the growing number of carriers ignoring the minimum
freight rate table. However, most carriers continue to comply to avoid
penalties. Fertilizer companies remain reluctant to absorb the rate increases
imposed by the table. In this context, the situation would only be resolved with
a ruling from Brazil's Supreme Court on the constitutionality of the issue. But
market participants believe it is unlikely that the issue will be resolved in
2026, as it is unpopular and affects an important sector for the country in a
year of federal elections. By João Petrini Send comments and request more
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