The move comes in connection with the gathering of the countries of the Mercosur trade bloc in Foz do Iguaçu in Brazil, near the border with Argentina and Paraguay.
The Mercosur customs union also includes Uruguay. Member country Venezuela is currently suspended due to the political situation in the country.
"Without political will and courage from leaders (within the EU), it is not possible to conclude negotiations that have been going on for 26 years," said President Lula in his opening speech.
European Commission President Ursula von der Leyen announced to EU leaders at Thursday's summit in Brussels that the signing will be postponed until next month.
Both France and Italy have called for more time to consider the trade agreement between the EU and Mercosur. Agricultural issues, among other things, have been a problem for the countries.
"We have the opportunity to show the world the importance of multilateralism, and to strengthen our strategic position in a global environment that is increasingly competitive," said the Brazilian President, adding:
"Unfortunately, Europe has not yet made up its mind."
