March 23, 2020

COVID-19 Brazil: Trade update of Soyabeans

Written by Jack Birchenough and Rebecca Armstrong

At this point in time, news remains encouraging for traders and exporters of Brazilian soyabeans. The ports of Santos and Paranagua remain open and, as recently confirmed by Regis Prunzel, President of Sopsep, after a meeting of stakeholders at Santos port on Wednesday 18 March 2020:

“Port activities will continue in a normal fashion. This is our stance. Port authorities will issue a statement and the workers are in agreement with the initiative"

Despite the large scale shutdowns experienced throughout the country, Chinese ports remain open. However, with reports of severe logistical disruption outside of ports in China, and as the spread of COVID-19 progresses in Brazil, companies should be prepared for inevitable issues arising at various points in the supply chain, for instance:

  • Free Pratique: We understand that the Brazilian national sanitary authority, ANVISA, has issued helpful guidance that Free Pratique (permission for a vessel to enter port, from a disease control point of view) will for the time being still be issued to vessels which have isolated cases of COVID-19 aboard. However, this appears to be predicated on other crew members wearing full personal protective equipment, which is becoming harder to obtain. We also understand that Brazilian Health Authorities will be boarding vessels where symptoms are observed and vessels may be quarantined. Vessel Medical Logbooks will potentially become increasingly important pieces of documentation for vessels seeking permission to enter ports.

NOTE: in some contracts, the granting of Free Pratique is a requirement for a valid notice of readiness to be given.

  • Quality & Condition: Consistency of sampling and testing procedures, and availability of necessary personnel at point of loading may become problematic moving forwards, with the potential for knock-on uncertainty regarding the quality and condition of cargo at loading. These issues may be exacerbated if loading of cargo is delayed, or storage conditions are compromised as a result of staff shortages.

NOTE: in contracts governed by FOSFA or GAFTA rules, there are very short time bars for bringing some quality and condition claims.

  • Force Majeure/Prohibition: Given the nature of the disruption described above, companies may need to consider the provisions relating to 'force majeure' and 'prohibition' in their contracts. Whether companies can rely upon such provisions will be very contract and fact-specific.

We would like to hear from you about your experiences of trade and export during the current period. If you would like to discuss any of the issues above with us, or have any questions, however small, do get in touch.