May 10, 2012

Vessels Wait up to Three Weeks to Load Soybeans in Brazil

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

The rush to export soybeans and soybean meal from Brazil is resulting in a lineup of dozens of vessels at Brazil's southern ports with wait times to load averaging 20 days and in the worst cases, up to a month. The tremendous demand for soybeans is pushing port operations to the limit, but the ports just don't have the capacity needed to meet the demand.

According to the Administration of the Ports of Paranagua and Antonina (Appa), as of May 8 there were 16 vessels berthed, 51 in the bay waiting to load, and 23 more vessels expected to arrive within the next 48 hours. Nearly half of the vessels are waiting to load soybeans or soybean meal from the public export corridor. Even though these wait times are exceptionally long, they are within the historical average for the port. Appa officials do not feel that the port has lost any business due to the long waits, but there are reports of exporters bypassing the Port of Paranagua in favor of other ports such as Sao Francisco in the state of Santa Catarina.

Appa reported that during the first quarter of 2012, the Port of Paranagua exported 2.9 million tons of soybeans and 1.7 million tons of soybean meal, which represented an increase of 67% and 22% respectively compared to a year earlier.

The increased export pace is the result of strong soybean prices encouraging farmers to rapidly sell their 2011/12 production, relatively dry weather at the port allowing for an accelerated loading pace, as well as a weakening of the Brazilian currency which makes the prices even better for Brazilian farmers.

The government is trying to address the chronic congestion at the port with a proposal to expand and modernize the port including an estimated price tag of R$ 2 billion. The proposal involves building a new "T" shaped pier which would allow for seven vessels to be loaded simultaneously at the public corridor instead of the present three vessels. The proposal also involves covers for the vessels which would allow for loading operation to continue during periods of wet weather. Currently, loading operations are suspended whenever there is a chance of rain and rainy weather is the number one reason for loading delays.

In the meantime, port officials hope to increase their daily loading capacity simply by upgrading the six ship loaders at the public corridor. Currently, each ship loader can handle 1,500 tons per hour, but with a simple upgrade of key parts of the ship loader, that can be increased to 2,000 tons per hour.

The other large port in southern Brazil is experiencing delays as well. At the Port of Santos in the state of Sao Paulo, which is the largest port in Brazil, there are 34 vessels berthed and 126 expected to arrive in the next 30 days. Most of the vessels at Santos are for containers, but it is also a major port for soybean exports as well. The average wait time for loading soybeans at the port is 12 days. At private ports along the coast of Sao Paulo the average wait time is only five days.