SAO PAULO, Feb 21 (Reuters) - Brazilian grain traders'

association Abiove is challenging a new state law imposing a

1.8% levy on grain exports from Maranhao that will take effect

next week, Abiove head Andre Nassar told Reuters in an

interview.

Maranhao state had no immediate comment. The port of Itaqui

in Maranhao is one of northern Brazil's most important grain

export hubs.

Under the new law, an export tax will be charged on

shipments of grains such as soybeans, corn, sorghum and millet.

Critics have said it deals a blow to farmers and grain

handlers operating in Brazil, potentially making the country

less competitive against rivals such as the United States and

Argentina in world markets.

Abiove, which represents global grain merchants including

ADM, Bunge, Cargill, and Louis Dreyfus, filed a

suit against the levy on Thursday, Nassar said in an interview

late on the same day.

The new tax spurs legal insecurity and erodes profitability,

he added.

"Grain trading is a low margin business, 1.8% is bigger than

the margin of the business," Nassar said.

In 2024, nearly 14 million tons of soybeans worth $6.1

billion were shipped from Itaqui, according to trade data

provided by Abiove. Itaqui's total shipped volume for corn was

about 4.3 million tons, worth some $859 million.

Another new tax law in Para state taking effect next month

is worrying local soy and corn farmers, said Vanderlei Ataides,

head of local farmer lobby Aprosoja Para.

The law imposes a 4.32 real ($0.7565) charge on a 60-kilo

soybean bag and a 2.09 real ($0.3660) charge on a 60-kilo corn

bag.

Abiove said it is unclear who will pay the new Para tax, if

it would be farmers or buyers.

Ataides said talks are ongoing to reduce the tax and or to

postpone enforcement of the new Para law.

"Buyers have disappeared," Ataides said, referring to grain

traders scrambling to make sense of the new Para law, which will

be enforced as local farmers harvest their new soy.