South America Calling
Alastair Stewart South America Correspondent

Wednesday 12/26/12

Brazil to See Soy Transport Costs Explode In 2013

Brazilian farmers will see the cost of transporting soybeans explode in the post-harvest period due principally to a record crop and a lack of motorists to truck produce down to port.

According to the Mato Grosso Agricultural Economy Institute (IMEA), the cost of transporting a metric ton of soybeans from Sorriso, Mato Grosso to Paranagua port, one of the main export points in the south, will rise 56% this year to R$310 ($150).

Brazilian soy transport prices are already much higher than in the U.S. and Argentina -- nearly four times higher, according to the exporters association -- and the 2013 jump will further affect competitiveness against the other major soybean producers.

There is a confluence of factors pushing up freight prices.

Firstly, and perhaps most significantly, soybean output is expected to rise by 20% to 81 to 83 million metric tons (mmt) this season, according to most local forecasters, inflating demand for trucks and wagons to transport the crop

Secondly, and also very importantly, with Brazil getting near full employment, there is increasingly a lack of motorists to trucks beans the often-enormous distances to port -- Sorriso to Paranagua is 1,300 miles. That shortage will be aggravated this year by the new Truckers Law, which restricts motorists to 10-hour days and demands they rest half an hour for every four at the wheel.

Thirdly, diesel prices have risen.

Fourthly, a smaller-than-expected U.S. harvest means demand for beans will be more concentrated than ever at the start of the Brazilian export season in March.

Fifthly, trading companies still have winter corn in their Mato Grosso silos, which they will have to ship in the first quarter, occupying motorists and taking them away from producing regions.

It is worth remembering that the Mato Grosso corn market ground to a halt for parts of August and September because of a lack of available motorists.

"We are losing the capacity to transport (our crop)," declared Carlo Lovatelli, president of the Brazilian Oilseed Crushers Association (ABIOVE).

In case you think there is some exaggeration in these forecasts, it is worth noting that freight prices are already 15% to 20% higher than in last March and we are in the middle of the inter-harvest period.

Posted at 9:14AM CST 12/26/12 by Alastair Stewart
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