Abiove, a Brazilian oilseed group, said on Tuesday June 11 that commodity traders, due to defaults and bankruptcy protection requests, could cut farmers' funding for the new crop by about 50% (2019-2020).

Patricia da Silva, Tax and Legal Manager at Abiove, said potential credit cuts to farmers are due to a “breach of trust” between grain traders and grain producers in Brazil, the world's largest export of soybeans and other agricultural products.

Trading companies located in Brazil, using barter operations, exchange in advance the fertilizers and agrochemicals given to farmers for part of their future harvest. But the wave of defaults that swept the farmers of Brazil's main agricultural state, Mato Grosso, added a headache to creditors as Now it will be very difficult for them to get the agreed part of the crop.

In Brazil, grain traders account for about a third of farm financing.

“We need to restore confidence in our partners,” said Silva at an event organized by Abiove, where the group promised to be more active in discussing policies for the oil industry.

A wave of defaults by farmers in Brazil's main agricultural state, Mato Grosso, has created a headache for global traders, who are some of the main lenders to farmers.

Abiove president Andre Nassar told reporters Tuesday, June 11, that commodity traders are more cautious about the new season due to the uncertainty associated with freight prices in Brazil and the large supply of soybeans in the United States.