South America Calling

There has been a lot of coverage of the chaos at Brazilian ports following the arrival of this year's soybean harvest.

But the problem isn't just increased demand to ship beans, it also has a lot to do with a backlog in corn exports that has seeped into the soy season.

Brazil shipped 7.3 million metric tons (mmt) of corn in the first three months of 2013, some five times more than the year before.

Most of those shipments were programmed for January and February, but delays meant that 1.6 mmt were in fact shipped in March, when bulk terminals are typically turned over to soybeans.

This was an aggravating factor in the decline in first-quarter soybean exports, which slipped 29% on the year at 4.8 million metric tons (mmt), although late harvesting was the main reason.

The heavy corn shipments contribute to the massive ship line-ups at ports and directly delay soybean shipments as the January and February corn shipments were first in the line-up -- the wait to load beans is currently around 45 days at Paranagua port.

The good news is that corn shipments are now virtually finished and the ports can concentrate exclusively on soy. As a result, soy export numbers will probably increase sharply from April and ship waiting times will likely fall.

But the problem of seepage of corn exports into the soybean export window, and vice versa, is here to stay as ports struggle with growing volumes of grain exports.

To be sure, 2012-13 was an unusual year with late-season demand for Brazilian corn particularly strong due to losses in the U.S. But Brazilian corn production continues to grow -- output will rise 4.2% to 76 mmt this season, says the government -- and exports will remain strong.

Meanwhile, there are so many soybeans to export that Brazil will increasingly be forced to ship large quantities of beans beyond the traditional March-to-August window, sending big volumes in September, October and November also. That will restrict space for second-crop corn shipments at port. This applies for this year and for harvests to come.

The extension of the soybean export season will also mean transport costs remain high in the second half of the year.

That's a worry as freight rates during peak soybean season are absurdly high. It currently costs R$285 to send a ton of grain from Sorriso, Mato Grosso, to Paranagua, which is 40% more than last year and marginally more than the cost of the corn itself.

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