April 19, 2013

Argentine Grain Starting to Move to the Ports

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

As Argentine farmers move into the heart of the harvest season, attention now turns to activities at the Argentine ports and if there will be logistical delays similar to those experienced in neighboring Brazil. Argentina exports approximately 90% of the soybeans produced in the country either as grain, soybean meal or soybean oil and the soybean complex is the number one agricultural export from the country.

The majority of the export terminals in Argentina are scattered along the Parana River near the city of Sao Lorenzo in Santa Fe province where 22 grain terminals and numerous crushing plants are located. Vessels are currently waiting approximately two weeks to start loading and once at the dock, it takes two or three days to complete loading. One of the problems in Argentina has been congestion in the Parana River channel leading to the port complex. Even with these delays, it is still much better than at the Port of Paranagua in southern Brazil where the wait time has recently been as high as 60 days.

The soybean crop in Argentina is approximately 40% harvested and the corn crop is 32% harvested, and eventually 85% of the soybeans exported from Argentina will be shipped out of the ports along the Parana River. Transporting the soybeans to the ports is relatively easy since two-thirds of the soybeans in the country are produced within 300 kilometers of the ports. An estimated 80% of the soybeans are transported by truck to the ports with 15% arriving by rail and 5% by barge. The vast majority of soybeans arriving by barge are coming out of Paraguay, which lies upstream on the Parana River. In recent days, the number of trucks arriving at the port complex increased to over 4,500 per day.

Argentina is expected to produce approximately 50 million tons of soybeans and 24 million tons of corn, which combined is 12 million tons more than what was produced in 2011/12. According to the Grain Exchange in Rosario, only 20% of the anticipated soybean production has been sold and 80% still needs to be commercialized.

At the start of the growing season, it was estimated that the 2012/13 Argentine soybean crop would reach 55 million tons, but widespread flooding early in the growing season slowed the planting progress and then hot and dry weather during January and February trimmed the crop even more. The latest hurdle for the crop was several episodes of early frosts that impacted some of the later planted soybeans.

Argentine farmers also must contend with numerous economic factors including: high export taxes (35% for soybeans), an inflation rate of approximately 30%, an unfavorable currency exchange rate (the official rate is about 5 pesos to the dollar while the unofficial rate is about 8.5 pesos to the dollar), and a federal government that has been very antagonistic toward the agricultural sector.