South America Calling

As we reach mid-January and the soybean harvest slowly cranks up, Brazil's grain industry is once again bracing itself for the annual lottery that is exporting the crop.

A 10% increase in nationwide output will put strains on Brazil's shaky logistics, although increased capacity at Amazon ports is expected to ease some pressure in Mato Grosso and surrounding states.

On Tuesday, Brazil's new Agriculture Minister Katia Abreu, along with Ports Minister Edinho Araujo and Transport Minister Carlos Rodrigues, announced the measures to help the flow of soy in 2015.

In truth, the measures were limited.

They included the creation of truck flow control room, aimed at stopping trading firms from simply sending bean trucks to port when up-country storage space is full, and the posting of a road team along unpaved parts of the BR163, which connects Mato Grosso with the new northern river ports, to ensure the smooth flow of trucks.

In fact, the BR-163 was supposed to have been paved years ago with the government always promising completion a year hence. The route is expected to carry a much higher volume of soy this year after Bunge and ADM opened new grain terminals at the mouth of the Amazon River last year.

These terminals will be fed by barges that are loaded at Miritituba, a river terminal near the top of the BR163.

According to ABIOVE, the Brazilian Soybean Industry Association, approximately 5 million metric tons (mmt) of soybeans could be shipped via this route in 2015.

However, figures presented by the agriculture minister Tuesday were much more conservative, estimating some 11.5 mmt of Brazil's estimated soybean and meal exports of 64.2 mmt will go through northern ports in 2015, actually down from 13.1 mmt last year.

Sending more beans through northern ports is key to unclogging Brazil's infrastructure, increasing capacity and also, to some extent, reducing costs.

For example, in the western Mato Grosso town of Campo Novo Parecis last year it cost R$212 per metric ton ($2.19 per bushel) to ship beans via the Amaggi barge terminals in Porto Velho and Itacoatiara, while it cost R$250 per ton ($2.58 per bushel) to ship via Santos port.

Similar savings are expected on new Amazon routes.

The truck coordination is a positive step. Paranagua and Santos port have increased grain cargoes in recent years by increasing efficiency, which has meant the chaos of 2011 and 2012 hasn't been repeated despite larger crops.

This year less urgency in international demand, which has a record U.S. crop to access, will also likely reduce pressure on infrastructure, and hopefully major bottlenecks won't occur.

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

(AG)

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