Brazil's grain exporters are shifting sales toward Asian markets amid rising costs linked to escalating tensions in the Middle East, which are raising concerns about longer-term impacts on the country's agricultural supply chain.
The Middle East situation is affecting Brazil's grain exports through its impacts on fertilizer supplies, diesel prices, transportation costs and market access. Higher nitrogen fertilizer prices and surging oil costs have pushed up expenses across the entire supply chain, from planting to port delivery.
Meanwhile, with several ports in the Middle East reportedly closed, local grain exporters have been compelled to redirect shipments to Asia. Businesses worry that if the conflict drags on, Brazil's grain production and exports could face further spillover effects.
Rio Grande do Sul, one of Brazil's major grain-producing states in the south, exports soybeans, wheat, sesame and oats to markets around the world through its port network.
Most agricultural products from the state are transported by truck, while nearly 30 percent of Brazil's diesel supply relies on imports.
At a gas station in Carazinho, truck drivers said soaring diesel prices have become a major concern.
"It has increase by around 40 percent. The price was 5.35 to 5.49 reals per liter. Today it is 7 .9 to 8 reals per liter. It's a very big increase, which is of course, because of the war that is taking place in the Middle East," said truck driver Raul Carlos.
"The price rise is absurd. It's almost a 2-real increase per liter for fuel. Here in Carazinho, there are stations that release 200 liters of fuel to each customer," said another truck driver, Miguel.
While higher diesel prices have driven up land transportation costs from farms to ports, exporters say the most direct shock has come from maritime shipping.
Bernardo, head of the export department at a local grain exporting company, said the conflict has made once-stable trade routes increasingly risky.
The company mainly sells black beans, sesame and oats to the Middle East and some Asian countries.
Bernardo cited a shipment bound for Jordan's Aqaba Port. Freight costs for a container carrying 25 tons of oats have surged from 2,000 U.S. dollars to 5,000 dollars, while the cargo itself is worth only about 6,000 dollars.
That means shipping costs have jumped from roughly one-third of the total value to more than 80 percent, leaving exporters with little to no profit. In contrast, freight rates to Asian destinations remain significantly lower.
Some ports in the Middle East charged a surcharge because of the war risk, causing a rise in sea freight fees. Even the cargoes that are already at sea suffered a 100 percent surcharge on international freight," said Bernardo.
Agricultural analysts in the country noted that Brazil is currently entering a seasonal peak in grain shipments.
Rerouted shipping lines, elevated transportation costs and uncertain vessel schedules are posing a series test for the resilience of Brazil's export chain.
As one of the world's major food suppliers, any shift in Brazil's agricultural trade flows could have implications beyond domestic exporters, potentially affecting stability across global food supply chains.
"The entire chain of Brazil's food export is being affected because of the war. If the situation persists, we are going to face uncertainty in the market regarding shipment and contract fulfillment, because now we cannot guarantee the security of shipments or whether we can meet the delivery period stipulated in the contract," Bernardo said.
Middle East tensions ripple through Brazil's grain exports
