May 13, 2011

Long Waits to Load Sugar at Brazilian Ports - Again

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

For the second year in a row, importers of Brazilian sugar have been frustrated by the slow pace of loading at the ports of Santos and Paranagua in southern Brazil. Currently there are approximately 55 vessels waiting to load sugar compared to 36 vessels that were waiting to load last year at this time.

The reasons for the delays this year is the lack of sugar at the terminals. Heavy rainfall during March and early April when the sugarcane harvest was getting started kept harvest activities lighter than normal and as a result, sugar production is running behind schedule. Last year at this time, 2.55 million tons of sugar had been produced, but this year, only 1.04 million tons have been produced. As a result, some of the terminals at the ports are only operating at half capacity. Vessels at Santos are waiting an average of 12 days to load sugar when the normal wait time should be two or three days.

The delays last year were caused by rainfall that halted loading operations at the ports. Sugar is shipped out of Brazil in both sacks and in bulk and loading operations must be suspended whenever rainfall occurs. During some weeks in 2010 the lineup of vessels waiting to load sugar from Brazilian ports reached as high as 100.

In 2010, Brazil exported a record 28 million tons of sugar and 2011 exports are expected to be slightly higher. Some contracts for delivery during April and May have had to be pushed back several months with the sugar/ethanol mills paying a fine for non-delivery.

The mill operators are expecting sugar production to return to more normal levels over the next several weeks as the harvest pace increases.