Brazil will send 30,000 tons of high-quality, processed rice to Iraq at the beginning of the second half of the year. The winning bid from an international trading company in the tender promoted by the Iraqi Ministry of Commerce on March 31, at a price of US$1,400,000/ton (CIF), has been confirmed. The export marks the return of Brazilian grain to the market in this country after almost five years since a shipment was rejected for not meeting the bidding standards, and brings hope to Brazilian exporters of keeping this business option open. Another 30,000 tons were part of the tender, but the operator withdrew it because it considered that there would not be enough time for delivery.
The entire operation was carried out by international trading companies, without direct participation from the Brazilian sector. Global companies quoted prices in mid-March, but exchange rates and domestic prices changed. This is why the negotiation is a concern for the production chain, since Iraqis are highly demanding regarding standards and Brazilian logistics is not so favorable to the export of processed grain in bulk, since several “drops” are necessary in the cargo from the industry to the final destination. To make matters worse, the purchase is of bagged rice, which required the setting up of a new operation for delivery.
Market agents consider that the trade proposal is at least US$$ 30.00/ton below the market, which could require a huge effort from Brazilian operators and industry to give up margins and access the Iraqi market, which has a reputation for buying a lot and paying well.
“This is a market that Brazil wants, but if it is not served very well, it will put us back on that country’s blacklist for a long time to come,” acknowledges an industrialist from Rio Grande do Sul. The supply chain is now hoping that the negotiations will work out and that the cargo will reach its destination meeting specifications. Opening this commercial window could guarantee the export of 100 to 150 thousand tons of rice per year to this destination, depending on the Brazilian supply chain.
Source: agrolink | Author: PLANET RICE
