April 25, 2013

Dryer Weather Aids Soybean Loading at Port of Paranagua

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

One of the reasons for the long line of vessels waiting to load soybeans at the Port of Paranagua in southern Brazil is the lack of covers which would allow loading operations to proceed during times of wet weather. Without the covers, loading operations must be suspended when there is a threat of rain.

During the month of March, loading operations at the Port of Paranagua were suspended for 13 days due to wet weather, but the weather in southern Brazil has turned much dryer during the first three weeks of April, which has aided loading operations. During the first three weeks of the month, loading operations at the port were suspended for just 79 hours (slightly more than three days) due to wet weather. Going forward, port officials expect the rainfall to continue to diminish with the end of the summer rainy season.

Brazilian soybean exports during April are expected to be the highest since June of 2012. As of April 22, there have been 4.75 million tons of soybeans exported from Brazil compared to 3.53 million tons during March and 4.84 million tons in June of 2012. When operating at full capacity, the three public berths at the Export Corridor at the Port of Paranagua can load about 80,000 tons of grain per day.

In 2012, Brazilian soybean exports peaked by August and then declined. With a record large production expected in 2012/13 accompanied by record large exports (38.2 million tons), the peak of the soybean exports from Brazil this year is expected to go beyond the month of August. If that is the case, then Brazilian soybean exports will compete with exports from the United States when the U.S. soybean harvest begins in September and October.

A lack of investments in expanded export capabilities has led to widespread logistical problems in Brazil. The ultimate chokepoint for Brazilian exports is the lack of berths at Brazilian ports capable of loading soybeans and corn. Over the last decade, Brazilian soybean production has gone from approximately 50 million tons to over 80 million tons and corn production has gone from 40 million tons to an estimated 75 million tons, yet the number of berths at Brazilian ports has increased very little.

In addition to port delays, there have been logistical problems all throughout the transportation chain in Brazil including: a lack of trucks to transport the grain, inadequate rail service, nearly non-existent barge operations, and extremely high transportation costs. The Brazilian government has announced plans to address the infrastructure shortfalls over the long term, but in the meantime, the country will continue to struggle with their inadequate infrastructure.