By Roberto Samora
SAO PAULO, March 9 (Reuters) – A rise in diesel prices is emerging as the first and most immediate threat to Brazil’s agricultural sector from the U.S.-Israeli attacks on Iran, raising costs for producers who are harvesting record soybeans and planting corn they cannot afford to delay.
Brazil imports about 30% of its diesel needs, with farmers facing rising domestic fuel prices on top of global oil prices, representatives of major agricultural groups said.
The dispute comes at a critical time for Brazilian agriculture, when demand for diesel is at its peak. Farmers are taking soybeans to market, harvesting the rest of the field and completing a second crop of corn, which makes up most of the country’s corn.
Brazil is the world’s largest exporter of soybeans and a major supplier of corn, creating a bottleneck in agricultural operations for global grain markets.
Industry officials said these activities could not be suspended, nor could other field operations such as fertilizer and pesticide application, which also rely heavily on diesel.
“Currently, the main issue is the price of diesel. We have seen oil prices go from $80 to $100 per barrel, and this has caused concern in rural areas,” Bruno Lucci, technical director of farm lobby CNA, told Reuters.
Oil prices rose above $119 a barrel on Monday before easing slightly. As of around 2pm local time, Brent crude was still up more than 7%, trading near $100 a barrel.
The increase in diesel prices has already been felt while Petrobras, which supplies most of the market, has yet to change its prices. Farmers have also reported diesel delivery problems in Rio Grande do Sul, and some suppliers claim to be limiting sales as higher fuel prices drive up costs.
Luchi said higher costs or disruptions to nitrogen fertilizer imports from Iran due to risks in the Strait of Hormuz are manageable for now as farmers have already secured supplies for the current season and can delay new purchases.
However, diesel is an immediate problem. Clayton Guyer, IEA director of the Mato Grosso Farm Economics Institute, said producers now need fuel to move field work. Diesel and oil typically account for about 5% of farm operating costs, he said.
Lucci said he had received reports of pump prices rising by around 1 reais per liter in the center-west and southern regions of Brazil, in some cases as high as 1.5 reais.
(Reporting by Roberto Samora; Writing by Kyle Madry; Editing by Aurora Ellis)
