Mar 03, 2010
Lack Of Infrastructure Could Extend Brazil's Export Season
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazilian soybean farmers are worried that even though they are going to harvest a record large crop, the infrastructure situation in Brazil - highways, railroads, storage facilities, and ports, will not be able to handle such a large crop in a timely fashion.
A prime example of these worries can be seen in western Parana. The state of Parana registered the largest increase in soybean acreage in 2009-10. Additionally, the soybean yields in Parana will probably be the highest in Brazil this year surpassing last year's drought afflicted crop by 28%. The combination of increased acreage and increased yields means that the state of Parana is going to have a record large soybean crop to store and transport.
The railroad that services the western part of Parana, called the Ferroeste Railroad, is wholly inadequate to handle such a large crop. The Ferroeste Railroad is only capable of completing two round trips per a 24 hour period between the Port of Paranagua and the interior Parana city of Guarapuava with a total capacity of just 3,000 tons every 24 hours. Such a small volume is far short of what is needed to service the region. There are no significant barging operations in Parana, so the bulk of the soybean crop needs to be transported by truck to the ports.
It is also anticipated that there will not be enough storage capacity in Parana to handle the record soybean crop. Of the 688 storage facilities in western Parana that are certified by Conab, most of them are operating at only 80% capacity due to grain that is still in storage from last year's crop.
As bad as it may seem to be in Parana, the state of Parana is probably the best-equipped state in Brazil to handle large crops. The transportation situation in Mato Grosso for example is infinitely worse given the great distances to the ports and the lack of any alternative means of transportation out of the state.
The result of this lack of infrastructure is going to be bottlenecks and delays in transporting the crop to the various ports in Brazil. As a result, it is entirely possible that the Brazilian export season will be extended this year and that Brazil will still be shipping soybeans late into the fall when U.S. exporters are expected to pick up the bulk of foreign demand.