August 15, 2012

Brazil Fertilizer Imports Delayed at Port of Paranagua

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

An already bad situation at the Port of Paranagua in southern Brazil continues to get worse. During the first six months of 2012, the average wait time to berth at the port was 14.6 days (not too bad), but estimates are that the average time to berth during the second half of 2012 will increase to 37.5 days or 45% longer than an equal period in 2011.

The increased wait time could impact the imports of fertilizers into Brazil at the same time that Brazilian farmers are expected to plant a record large soybean crop in 2012/13. The Port of Paranagua is the principal entry point for imported fertilizers into Brazil. An estimated 6 amillion tons of fertilizers will enter the port, which is an increase of 17% compared to 2011. The fertilizer supplies in the interior are near zero as distributors wait for the needed imports.

Vessels unloading fertilizer at the port late last week arrived at the port 55 days ago in the middle of June. If a vessel arrives this week at the port with needed fertilizers, it probably won't be able to unload until late September. Once the fertilizers are unloaded at the port, it could take at least several more weeks to get the product into the hands of the farmers in the interior of Brazil. By that time, soybean planting will be well under way in states such as Mato Grosso.

If there is sufficient soil moisture to plant soybeans on September 15, which is the first day they are allowed to plant in central Brazil, the bulk of the soybeans could be planted in Mato Grosso by the end of October. If distributors have fertilizers in their warehouse, farmers have been advised to have it delivered to their farms as quickly as possible to avoid potential delays as planting begins.

The fertilizer shipments are just a part of the 137 vessels waiting in the Paranagua harbor as of late last week. The number of vessels now waiting is 168% greater than the 51 that were waiting at the beginning of May.

In addition to chronic under capacity at the port, rainy weather and a series of strikes by federal workers has made the situation worse. Loading and unloading operations are suspended every time there is a possibility of rainfall. The rainfall at the port during the month of June was heavier than normal causing the wait time to increase. August is generally a dry month, but spring rains can start to occur as soon late-August or early September, which would add to the problems at the port.

A solution to this problem would be the instillation of covers that could protect the entire vessel or just the individual hold where loading is occurring. The cost of covering all the vessels at the port is estimated at US$ 60 million. To cover an individual hold with a rigid cover, it would cost an estimated US$ 6 million, but with a flexible cover, the cost could be as low as US$ 1 million. Port authorities have been analyzing various options for the port, but no decision has been made and no money has been allocated.

In addition to the logistical problems at the port, the delays have been amplified by a series of strikes and work-slowdowns by federal workers including: fiscal officials, sanitation and grain inspectors, and the federal police.