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March 21, 2013

Over 100 Vessels Waiting at Port of Paranagua in Southern Brazil

The number of vessels waiting in the harbor at the Port of Paranagua in southern Brazil surpassed 100 this week and another 22 vessels are expected to arrive at the port within 48 hours. This is three months earlier than last year when the number of waiting vessels did not exceed 100 until June 22.

Brazilian farmers are expecting to harvest a record large soybean crop of over 80 million tons in 2012/13 and the demand for the Brazilian soybeans is extremely high given the drought reduced 2012 soybean crop in the United States. The port though has not added any additional loading capacity over the past year, so it has resulted in very long waiting times to load soybeans. The three public berths at the Port of Paranagua can load 65,000 tons a day and at that rate, it will take a minimum of 50 days just to load the vessels waiting in the harbor. The waiting period could be even longer if wet weather delays the loading operations.

Wet weather has played a significant role in delaying exports out of the Port of Paranagua. There are no covers for the conveyor systems or the holds of the ships, so loading operations must be suspended any time there is a threat of wet weather. From the first of the year until mid-March, loading operations have been suspended at the port due to wet weather for over 26 days or incredibly one third of the time!

The congestion at the port is not expected to abate any time soon due to volume of grain that needs to be exported. During the month of March, the volume of soybean exported out of Brazilian ports finally surpassed that of corn for the first time in about six months. According to the Exterior Commerce Secretary (Secex), since the first of the year, Brazil has exported 6.5 million tons of corn and 4.1 million tons of soybeans. During the same period in 2012, Brazil had exported 4.9 million tons of soybeans.

The delays at the port are thought to have influenced China's largest soybean importer, Sunrise, to cancel 2 million tons of Brazilian soybean contracts. The official reason stated by the company for the cancelations was port congestion, but falling soybean prices could have also influenced their decision. The company is expected to renegotiate their canceled contracts at lower prices in the future because soybeans from Argentina will not be available in sufficient volumes until May.