October 23, 2008


Brazilian exporters face difficulties with Russian importers


Brazilian exporters are directing shipments from Russia to other markets, with trading to that market halted as shipments are held up in ports as importers aim to renegotiate contracts and extend payment terms due to the depreciation of the Brazilian real against the US$.


According to the Brazilian Exporters' Association (ABIEC), there is currently excess supply in the Russian market, and the credit crunch crisis has generated contract default risks, when product was purchased at a high-priced real.


When trading with Brazilian exporters, Russian importers usually pay 30 percent at the time of sale and the remainder upon the arrival of the product in Russia. That 30 percent does not cover costs incurred in the shipping and returning of the product.


After Russian importers delivered a statement declaring credit difficulties, ABIEC stated that Brazilian exporters are reluctant to renegotiate prices but will accept longer payment terms on average, a 20 day credit may be given, but importers in Russia are requesting for a 10-15 day extension.


It is expected that exports to Russia will resume within the next few weeks, before Russian ports freeze with the onset of winter.

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