South America Calling

Delays at Brazilian ports promise to be worse than ever when the 2013-14 soybean crop arrives from February.

With an expected eight million metric ton increase in production from last year's record crop and no appreciable expansion in port capacity, the system may enter into partial collapse, warned Luiz Fayet, an infrastructure specialist linked to the Brazilian Agricultural Confederation (CNA).

Last year, ships waited at port for up to 80 days to load Brazilian soybeans, delaying delivery and prompting a number of buyers to switch orders to the U.S.

Back in 2012, President Dilma Rousseff announced a grand plan to modernize the ports. But regulatory questions have impeded the tenders necessary for port terminal expansion projects to go forward, especially in the north of the country, said Fayet.

For example, the project to build a new grains terminal in Belem, Para, is ready but not going forward. The same goes for plans to expand grain capacity at Santos and Paranagua ports, Brazil's two main exit points. Together, these projects would add 25 mmt to 30 mmt of badly needed grain export capacity.

Basically, Brazil has wasted a year ironing out regulations at a time when it needs immediate solutions.

Back in April, the cost of transporting soybeans from Sorriso, Mato Grosso, to Paranagua port jumped 50% as infrastructure failed to cope with the deluge of product.

Farmers fear those prices will jump even higher next year as the creaking system will likely have to deal with much greater volume. This is a particular worry to farmers because they have sold much less of their crop ahead of the harvest than in recent years. According to AgRural, a local consultancy, Brazilian farmers had committed just 34% of their crop as of Oct. 31, down sharply from 58% at the same point last year.

(ES)

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