Brazil concession model for the long haul: Minister

Market: Agriculture, Fertilizers
26/05/22

Brazil's policy of concessions and privatization of infrastructure assets is entrenched enough to persist even in the event of a change in government, according to infrastructure minister Marcelo Sampaio.

Brazil is having presidential elections in October and the most likely scenario is that the current president, Jair Bolsonaro, will face off against former president Luiz Inacio Lula da Silva, who is ahead in the latest polling. The ministry is obviously working with a baseline scenario of Bolsonaro's re-election, Sampaio told an international press conference today.

But a possible Bolsonaro defeat should not hinder the ministry's plans for 2022, which is set to end the year with R200bn ($41bn) in investments planned for the country's infrastructure over the four years of the current government. And the current concession model is robust enough to withstand any possible change of government, he said.

Sampaio also minimized the impact on the ministry's projects of high inflation, running at near two decade highs of annualized 12pc in May. For existing projects already in operation, severely affected contracts will be readjusted and rebalanced. In addition, for new projects, prices are being updated before they are analyzed by the Federal Audit Court and put into practice, Sampaio said

Through May 2022, the Ministry of Infrastructure has auctioned off 84 infrastructure assets, including highways, port terminals, airports, railroads, among others, totaling R100bn in forecast investments.

For the remainder of the year, another R100bn is expected. Another 15 airports are planned, highways in Parana state and the privatization of the port of Santos, the largest in Brazil. For the port of Santos, the public notice is expected to be published at the beginning of the fourth quarter of 2022, with the auction to take place in December.

Sampaio also highlighted the ministry's efforts to improve the image of Brazilian projects for foreign investors. This month, the minister was on a US roadtrip trying to attract investors to Brazilian projects, which he told reporters are more profitable and attractive than those of other developing countries such as Mexico, Colombia and India.

Still, regarding Brazil's concession model, some of whose projects have been criticized for the low concession fees collected, Sampaio said that the important thing is to guarantee the contracting of a service provider for a certain period of time. This guarantees that auctions and concessions are carried out successfully, regardless of the country's economic circumstances at the moment.

Merger of state companies

Also this week, in the logistics sector, President Jair Bolsonaro signed a decree authorizing the merger of the Logistics and Planning Company and Valec—Engineering, Constructions and Railways, thus creating Insfra.

Infra will be responsible for planning and structuring projects for the transport sector. According to the federal government, the measure will save R30mn in the first year of operation and from the second year on the savings will be R90mn/yr.

The new state-owned company will also be responsible for developing the National Logistics Plan and other sector plans.

All the projects in progress by state-owned companies will be managed by Infra, which includes the construction of sections II and III of the West-East Integration Railroad and oversight of work on the Center-West Integration Railroad.

By Joao Petrini

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

04/04/25

Tariffs and their impact larger than expected: Powell

New York, 4 April (Argus) — Federal Reserve chairman Jerome Powell said today tariff increases unveiled by US president Donald Trump will be "significantly larger" than expected, as will the expected economic fallout. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth," Powell said today at the Society for Advancing Business Editing and Writing's annual conference in Arlington, Virginia. The central bank will continue to carefully monitor incoming data to assess the outlook and the balance of risks, he said. "We're well positioned to wait for greater clarity before considering any adjustments to our policy stance," Powell added. "It is too soon to say what will be the appropriate path for monetary policy." As of 1pm ET today, Fed funds futures markets are pricing in 29pc odds of a quarter point cut by the Federal Reserve at its next meeting in May and 99pc odds of at least a quarter point rate cut in June. Earlier in the day the June odds were at 100pc. The Fed chairman spoke after trillions of dollars in value were wiped off stock markets around the world and crude prices plummeted following Trump's rollout of across-the-board tariffs earlier in the week. Just before his appearance, Trump pressed Powell in a post on his social media platform to "STOP PLAYING POLITICS!" and cut interest rates without delay. A closely-watched government report showed the US added a greater-than-expected 228,000 jobs in March , showing hiring was picking up last month. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

New tariffs could upend US tallow imports

03/04/25

News

03/04/25

New tariffs could upend US tallow imports

New York, 3 April (Argus) — New US tariffs on nearly all foreign products could deter further imports of beef tallow, a fast-rising biofuel feedstock and food ingredient that had until now largely evaded President Donald Trump's efforts to reshape global trade. Tallow was the most used feedstock for US biomass-based diesel production in January for the first month ever, with consumption by pound rising month to month despite sharp declines in actual biorefining and in use of competing feedstocks. The beef byproduct benefits from US policies, including a new federal tax credit known as "45Z", that offer greater subsidies to fuel derived from waste than fuel derived from first-generation crops. Much of that tallow is sourced domestically, but the US also imported more than 880,000t of tallow last year, up 29pc from just two years earlier. The majority of those imports last year came from Brazil, which until now has faced a small 0.43¢/kg (19.5¢/lb) tariff, and from Australia, which was exempt from any tallow-specific tariffs under a free trade agreement with US. But starting on 5 April, both countries will be subject to at least the new 10pc charge on foreign imports. There are some carveouts from tariffs for certain energy products, but animal fats are not included. Some other major suppliers — like Argentina, Uruguay, and New Zealand — will soon have new tariffs in place too, although tallow from Canada is for now unaffected because it is covered by the US-Mexico-Canada free trade agreement. Brazil tallow shipments to the US totaled around 300,000t in 2024, marking an all-time high, but tallow shipments during the fourth quarter of 2024 fell under the 2023 levels as uncertainty about future tax policy slowed buying interest. Feedstock demand in general in the US has remained muted to start this year because of poor biofuel production margins, and that has extended to global tallow flows. Tallow suppliers in Brazil for instance were already experiencing decreased interest from US producers before tariffs. Brazil tallow prices for export last closed at $1,080/t on 28 March, rising about 4pc year-to-date amid support from the 45Z guidance and aid from Brazil's growing biodiesel industry, which is paying a hefty premium for tallow compared to exports. While the large majority of Brazilian tallow exports end up in the US, Australian suppliers have more flexibility and could send more volume to Singapore instead if tariffs deter US buyers. Export prices out of Australia peaked this year at $1,185/t on 4 March but have since trended lower to last close at $1,050/t on 1 April. In general, market participants say international tallow suppliers would have to drop offers to keep trade flows intact. Other policy shifts affect flows Even as US farm groups clamored for more muscular foreign feedstock limits over much of the last year, tallow had until now largely dodged any significant restrictions. Recent US guidance around 45Z treats all tallow, whether produced in the US or shipped long distances to reach the US, the same. Other foreign feedstocks were treated more harshly, with the same guidance providing no pathway at all for road fuels from foreign used cooking oil and also pinning the carbon intensity of canola oil — largely from Canada — as generally too high to claim any subsidy. But tariffs on major suppliers of tallow to the US, and the threat of additional charges if countries retaliate, could give refiners pause. Demand could rise for domestic animal fats or alternatively for domestic vegetable oils that can also be refined into fuel, especially if retaliatory tariffs cut off global markets for US farm products like soybean oil. There is also risk if Republicans in the Trump administration or Congress reshape rules around 45Z to penalize foreign feedstocks. At the same time, a minimum 10pc charge for tallow outside North America is a more manageable price to pay compared to other feedstocks — including a collection of charges amounting to a possible 69.5pc tax on Chinese used cooking oil. And if the US sets biofuel blend mandates as high as some oil and farm groups are pushing , strong demand could leave producers with little choice but to continue importing at least some feedstock from abroad to continue making fuel. Not all US renewable diesel producers will be equally impacted by tariffs either. Diamond Green Diesel operates Gulf Coast biorefineries in foreign-trade zones, which allow companies to avoid tariffs on foreign inputs for products that are ultimately exported. Biofuel producers in these zones could theoretically refine foreign tallow, claim a 45Z subsidy, and avoid feedstock tariffs as long as they ship the fuel abroad. Jurisdictions like the EU and UK, where sustainable aviation fuel mandates took effect this year, are attractive destinations. And there is still strong demand from the US food sector, with edible tallow prices in Chicago up 18pc so far this year. Trump allies, including his top health official, have pushed tallow as an alternative to seed oils. By Cole Martin and Jamuna Gautam Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Funding cuts could delay US river lock renovations

03/04/25

News

03/04/25

Funding cuts could delay US river lock renovations

Houston, 3 April (Argus) — The US Army Corps of Engineers (Corps) will have to choose between various lock reconstruction and waterway projects for its annual construction plan after its funding was cut earlier this year. Last year Congress allowed the Corps to use $800mn from unspent infrastructure funds for other waterways projects. But when Congress passed a continuing resolutions for this year's budget they effectively removed that $800mn from what was a $2.6bn annual budget for lock reconstruction and waterways projects. This means a construction plan that must be sent to Congress by 14 May can only include $1.8bn in spending. No specific projects were allocated funding by Congress, allowing the Corps the final say on what projects it pursues under the new budget. River industry trade group Waterways Council said its top priority is for the Corps to provide a combined $205mn for work at the Montgomery lock in Pennsylvania on the Ohio River and Chickamauga lock in Tennesee on the Tennessee River since they are the nearest to completion and could become more expensive if further delayed. There are seven active navigation construction projects expected to take precedent, including the following: the Chickamauga and Kentucky Locks on the Tennessee River; Locks 2-4 on the Monongahela River; the Three Rivers project on the Arkansas River; the LaGrange Lock and Lock 25 on the Illinois River; and the Montgomery Lock on the Ohio River. There are three other locks in Texas, Pennsylvania and Illinois that are in the active design phase (see map) . By Meghan Yoyotte Corps active construction projects 2025 Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Trump to 'stand firm' on tariffs as markets crash

03/04/25

News

03/04/25

Trump to 'stand firm' on tariffs as markets crash

Washington, 3 April (Argus) — President Donald Trump does not intend to back down from his plan for sweeping import tariffs that have already caused a sell-off in global equity markets and some commodities, administration officials say. The tariffs — which will start at 10pc for most imports on 5 April before steeper country-specific tariffs take effect on 9 April, with exceptions for some energy and mineral imports — have caused key stock indexes to drop by as much as 5pc, with even larger declines in crude futures, as investors brace for lower growth and a higher chance of a recession. Trump earlier today defended the tariffs, as he prepared to leave the White House for a dinner tonight at a golf tournament at one of his resorts in Florida. "THE OPERATION IS OVER! THE PATIENT LIVED, AND IS HEALING," Trump wrote in a social media post before major stock markets opened. Trump's cabinet has downplayed the short-term price effect of the tariffs, which they say will boost economic growth in the US and cause a resurgence in domestic manufacturing. US commerce secretary Howard Lutnick said he does not think there is "any chance" that Trump will rescind the tariffs, and said Trump will only begin to work on new trade deals once a country has "really, really changed their ways" on trade practices. "Trump is going to stand firm because he is reordering global trade," Lutnick said today in an interview with CNN. "Make no mistake about it, America has been exploited, and he is done allowing America to be exploited." Other administration officials have suggested a greater potential for lower tariffs in the near-term. US treasury secretary Scott Bessent has encouraged world leaders to "take a deep breath" and not to "panic" because the tariff rates that Trump announced were a "ceiling" that might come down, so long as there was no retaliation. "Don't immediately retaliate, let's see where this goes, because if you retaliate, that's how we get escalation," Bessent said on 2 April during interview on Fox News. The tariffs have caused bipartisan backlash on Capitol Hill, but so far legislative action has been symbolic and unlikely to become law. The US Senate, in a bipartisan vote on 2 April, approved a joint resolution that would end the justification Trump has used to put tariffs on Canada. US senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Washington) introduced a bill today to eliminate most new presidential tariffs after 60 days without approval by the US Congress. Democrats say the tariffs will force consumers to pay far more on everyday goods, with revenue offsetting Republican plans to provide more than $5 trillion in tax cuts. "Donald Trump is using tariffs in the dumbest way imaginable. In fact, Donald Trump slapped tariffs on penguins and not on Putin," US Senate minority leader Chuck Schumer (D-New York) said today, in reference to Trump's decision to put a 10pc tariff on an island populated only with penguins. Trump has claimed his country-specific tariffs are "reciprocal" even though they have no relation to the tariffs each country charges on US imports. Instead, Trump's tariffs were calculated based on a universal equation that is set at half of the country's trade deficit with the US, divided by the country's imports from the US, with a minimum tariff rate of 10pc. Major US trading partners are preparing for retaliatory tariffs. Canada's prime minister Mark Carney said he would respond to Trump's tariffs on automobiles, which took effect today, by "matching the US approach" and imposing a 25pc tariff on auto imports that do not comply with the US-Mexico-Canada free trade agreement. China said it was preparing unspecified countermeasures to US tariffs that would be set at 54pc. Trump's cabinet today dismissed the market reaction to the tariffs. Stock markets are going through a "short-term adjustment" but the tariffs will ultimately result in more growth and additional investments, US Small Business Administration administrator Kelly Loeffler said today in an interview on Fox News "The gravy train is over for the globalist elites," said Loeffler, who previously was a top executive at US exchange operator ICE. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Ags prices caught up in tariff fallout

03/04/25

News

03/04/25

Ags prices caught up in tariff fallout

Paris, 3 April (Argus) — Grain and oilseed traders were buffeted by volatile futures markets and exchange rates on Wednesday. But the full impact of the tariffs imposed by the US — a major net exporter of wheat, corn and soy — is only likely to emerge once other governments' responses become clear. Wheat, corn and soybean futures were trading lower on the day when the Chicago Board of Trade opened on 3 April, the day after the US announced a swathe of import tariffs . But corn and wheat futures contracts began to recover hours later. Canada and Mexico, which made headlines in the initial wave of tariffs from Trump's administration, were on the sidelines on 2 April. Both are covered by the United States-Mexico-Canada Agreement (USMCA). This means Mexico could remain an important outlet for US corn and wheat — for now. US corn sellers have relied heavily on Mexico to shore up sales this marketing year. Of the 54mn t of current-crop US corn sold for export this marketing year (September-August) as of 27 March, 19mn t has been for Mexico, US Department of Agriculture (USDA) data show. USDA sees US corn exports hitting 62mn t this marketing year. Impact on Europe and Asia Euronext wheat, corn and rapeseed futures also began trading down on the day. But a sharp fall in the value of the dollar against the euro meant bids and offers for EU wheat discussed in the physical market in dollar terms held more or less steady early today. The Interactive Data Corp exchange rate closed at €0.90630 to the dollar at midday in London on 3 April — the lowest since October 2024. Ukrainian corn sellers are under particular pressure from a drop in the price of US commodities on certain markets, but could also stand to gain from a halt in deliveries of US corn to importers in Asia, before Brazil begins shipping its safrinha crop in July. Ukrainian corn typically competes with the US in Mediterranean markets, notably Spain, and in China. But Ukrainian corn has not been competitive against US corn recently — in the month since 3 March , when the US doubled tariffs on China from the 10pc introduced on 4 February, Ukrainian corn fob prices' premium to US corn fob Gulf has climbed, and in late March it hit its highest in Ukraine's current October-September marketing year, Argus -assessed prices show. But there is no guarantee that buyers will pay up, at least not immediately. Chinese buyers have already distanced themselves from US corn and soybeans this marketing year. Chinese buyers took little notice of Ukrainian corn sellers floating offers at above $270/t cif China on 2 April, immediately after the US announced an additional 34pc tariff on imports from China — bringing the actual rate to 54pc — and Beijing vowed retaliation . Chinese importers bid for Ukrainian corn in the $250s/t cif for July-August loading last week . Chinese buyers could be exposed to hikes in Brazilian soybean prices — something that might be more likely if EU buyers book more soybeans from Brazil at the expense of US cargoes. US soybean sales to China have already begun to slow. Chinese crushers have avoided US soybeans since December because of uncertainty over trade relations. Shipments to China dominated US vessel line-ups in late March, with exporters sending 641,000t to China on 21-27 March alone. Some 600,000t of corn was sold but not yet shipped as of 27 March, compared with 1.6mn t still to ship at the same point last month, weekly USDA data show. By Claudia Jackson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more