South America Calling

Brazil's soybean harvest has barely started and the ships are already lining up to ship at ports.

As many as 126 vessels were scheduled to load 6.2 million metric tons (mmt) of soybeans and corn, according to Unimar Agenciamentos Maritimos Ltda, Bloomberg reported. That's well up from 72 ships carrying 2.8 mmt at the same time last year.

Brazil is set to produce a record soybean crop of as high as 85 mmt this season, up 27% on the year before. This jump is expected to put enormous pressure on Brazil's overstretched ports.

As a result, delays of 45 days and more are expected at the principle exit points of Santos and Paranagua.

In an attempt to get ahead of the crowd, global buyers are sending ships to port early, according to local trading desks.

But this strategy has been partially blunted by big line-ups for corn shipments in February, as exporters try to ship new-crop corn before the bulk of the soy arrives.

It's a very tight situation, and one that could deteriorate if rain comes to delay loading.

The port issue is only one part of the logistical challenge facing Brazil's grain industry this year.

The explosion of soybean production in the Cerrado, far from port, combined with a lack of river and rail transport options and a scarcity of trucks come harvest time, has caused Brazilian transport rates to jump over the last 120 years.

Haulage rates to port have jumped from $1.20 per bushel of soy in 2003-04 to $2.48 per bushel in 2011-12, according to Andre Pessoa, director of Agroconsult, a local farm consultancy.

And a radical leap in rates is forecast for this season. Road freight rates will rise by 34% this season, predicts the Sao Paulo Shore Cargo Haulage Union.

The principle culprit is new legislation that limits truckers to 11-hour days and demands that they break for half an hour in every four, but a 5.4% increase in the price of diesel will also play a part.

Last year, Abiove estimated that Brazil is short of approximately 50,000 truck drivers.

Freight prices in Mato Grosso are already higher than the peak levels registered during last harvest and we aren't yet in the Feb. 20 to Mar. 20 high season.

Brazil has plans to send more grains through northern ports, easing the pressure on Santos and Paranagua, but most of these projects are years away from being able to handle large volumes.

© Copyright 2013 DTN/The Progressive Farmer. All rights reserved.