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May 26, 2020

Help is on the Way for Low Water Levels on the Parana River

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

Efforts to increase the water level of the Parana River at the ports in Argentina are now paying off. Starting last Monday, May 18, the spillway of the Itaipu Hydroelectric Dam was opened for 9 hours each day and it will continue that way for 12 days. Additionally, operators of Yacyreta Hydroelectric Dam, which is located downriver on the border of Argentina and Paraguay, also agreed to increase the discharge from their reservoir as well.

As a result, the water level of the Parana River downstream from the Itaipu Dam increased 3 meters last week. It will take a few days for the increased flow to reach the ports at Rosario, Argentina and it is expected to increase the water level at Rosario by 2 to 3 meters. These actions are already helping the movement of barges loaded with soybeans out of Paraguay.

In southern Paraguay there were 152 barges stranded for 50 days due to the low water level. Those barges started to move through the lock at the Yacyreta Dam last Tuesday. They will make their way downriver to ports in Argentina and Uruguay. Once in Argentina, most of these barges will offload their soybeans at the numerous crushing plants at the Rosario port hub.

A severe drought in southern Brazil and northern Argentina has resulted in the lowest water level on the Parana River at Rosario in more than 50 years and the lowest ever recorded during the month of April. Approximately 80% of Argentina's grain exports originate at the numerous ports on the Parana River near the city of Rosario. Argentina is the world's largest exporter of soybean meal and the third largest exporter of soybeans and corn.

Grain vessels have been forced to leave a portion of their holds unfilled due to the low water level. The vessels then must top-off their loads at deep-water ocean ports before heading out to sea. These logistical problems could not have come at a worst time because Argentina is in the midst of their peak export season.

According to the Director of Operations at the Itaipu Dam, this should increase the water level at Rosario by 2 to 3 meters, which will help exporters, at least temporarily. It is uncertain what will happen after the 12-day period. The increased discharge is expected to lower the water level in the Itaipu reservoir by 1.5 to 2 meters.