South America Calling

Brazil's ports are still struggling to cope with the deluge of soybeans arriving for export this season.

Halfway through the fourth month of Brazil's soybean marketing season, you would expect the lines of ships waiting to load soy to start receding.

But that hasn't happened yet.

Some 235 ships were queuing to load 13.3 million metric tons (mmt) of soy and corn at Brazilian ports on Monday, only marginally down from the 237 registered one month before, said shipping agency SA Commodities/Unimar.

The line has shortened at Santos, Brazil's biggest port, to 52 ships from 60 a month ago as drier weather allowed loading to accelerate

But the queue has grown at Paranagua, the top grain port, to 85 ships from 82 on April 12 and at Rio Grande to 49 ships from 42, said SA Commodities/Unimar.

"There are ships loading that were due to depart in March ... Ships in the current line-up won't be loaded till July," says Steve Cachia, grains analyst at the Cerealpar brokerage in the southern city of Curitiba. "The situation is still very bad."

One of the reasons that the line has grown at Rio Grande, a port way down in the south, is that exporters have been transferring cargoes from Santos and Paranagua in a bid to avoid the hefty delays there.

Brazil's ports have been overstretched for a number of years but an increase in soybean volumes this season has overwhelmed the infrastructure.

At the same time last year, there were only 101 ships waiting for soybean and corn at Brazilian ports. 

Brazil is expected to produce a crop of 81.5 mmt in 2012-13, up 23% on the year before.

Problems remain despite acceleration in soy loading over the last six weeks. After a slow March, due to rain, soybean exports hit a near-record 7.2 mmt in April. And operations appear to have picked up greater pace in May with 3.1 mmt shipped in first eleven days of the month.

Brazil will ship 36.8 mmt of soybeans this season, up from 32.5 mmt last year, the Agriculture Ministry forecast last week. Soymeal shipments are pegged at 14.9 mmt, up 4% on the year before.

The domestic soybean market remains generally slow amid quotes well below those seen last year and the continued inflated level of freight rates.

Many soybean farmers already sold large portions of their crop before planting and are in no hurry to sell the rest.

Approximately 65% of the 2012-13 Brazilian crop has been sold, traders say. In Mato Grosso and Goias, that figure rises to around 80%.

Those farmers in the more remote center-west regions will wait for freight rates to fall, among other things.

The price of transporting soybeans from Mato Grosso to port surged 30% to 40% this season. More recently there have been signs that rates are on a downward curve with rates to port down around 18% from the peak in March.

But second-crop corn will start hitting market from next month and that will pressure transport rates once again.

The fact Brazil is taking so long to export its soy means that second-crop corn shipments will be slow to start -- soybeans gain preference at grain terminals. That will restrict the amount of corn that Brazil is able to send before the U.S. crop arrives on the market in September. That's a problem, as Brazilian corn won't be competitive against U.S. corn once harvesting starts there, said Cerealpar's Cachia.

Alastair Stewart can be reached at alastair.stewart@telventdtn.com

(AG/CZ)

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