Jan 19, 2010
With Large Crops On The Horizon, Storage And Logistical Bottlenecks Expected In Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Elevator operators in Mato Grosso are still waiting for Conab to get serious about removing 300,000 tons of last year's corn that continues to occupy space needed for the 2009-10-soybean crop. Conab had promised that the removal of the government owned corn would start January 4th and it would take 40 days to complete. As of yet, only about 1% of the corn has been removed and officials from Conab cannot guarantee when the remainder of the corn will be removed. Combining both the public and privately owned corn, approximately 47% of last year's Mato Grosso corn crop is still in storage.
Industry observers are expecting storage and logistical bottlenecks to develop in Brazil. Even though Brazilian farmers reduced their full-season corn crop by 11%, the weather thus far during the growing season has been very beneficial and corn yields are expected to be quite good this year. Couple that with a record soybean crop and many are wondering where they are going to store all the grain and how are they going to move the grain to the ports.
A lack of infrastructure development in Brazil continues to drive up transportation costs in Brazil, which limits potential profitability for Brazilian farmers. Since the last harvest, very little new storage capacity has been built in Brazil, the capacity of the Brazilian ports is about the same, there has been some additional rain capacity added, but there are no new highways and the existing highways are still in poor condition. Brazilian trucking companies are already anticipating a shortage of trucks and higher freight charges during the peak of the soybean harvest.