Jan 13, 2009
A Record Soybean Crop In Brazil Could Also Mean Record Transportation Costs
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
As the Brazilian soybean harvest slowly gets under way, it looks like 2009-10 will be an all time record soybean crop. The increased production is expected to test the limits of Brazil's already overtaxed transportation system. Soybean producers in Mato Grosso are expecting freight costs to skyrocket during the peak of the harvest when trucks are in the most demand.
According to the National Transportation Agency, Brazil has approximately two million over the road semi trucks. The state of Sao Paulo has the most registered trucks with 26% of the total, followed by Minas Gerais with 12%. The state of Parana, which is the largest producer of grains in Brazil when you combine all the soybeans, corn, and wheat produced in the state, comes in third with 11%. The state of Mato Grosso, which is the largest soybean producer and second in overall grain production, has only 3% of the over the road semi trucks registered in Brazil.
The lack of trucks is especially troublesome for Mato Grosso because the grain produced in that state must travel further to get to an export facility than from any other state in Brazil. Since there are not enough trucks available in Mato Grosso to handle the demand at the peak of the harvest, transportation companies from other parts of Brazil send their trucks to the state to meet the demand and this drives up transportation costs even further. Some trucking experts are expecting a spike in freight costs during the peak of the soybean harvest.
The cost of moving soybeans from western Parana to the Port of Paranagua is about R$ 45.00 per ton or about 70 cents a bushel. The cost of moving soybeans from Sorriso, which is located in central Mato Grosso, to the Port of Santos is about R$ 200 per ton or about US$ 3.15 per bushel. There are estimates that it might cost as much as R$ 230 per ton or US$ 3.60 a bushel during the peak demand period.
One obvious solution to this problem would be to increase the amount of on farm storage so farmers would not be forced to hire trucks to haul their soybeans when freight costs might be the highest. On farm storage has been slowly increasing in Brazil, but not at a fast enough pace to keep up with increased production.
The harvest of the early-maturing soybeans started in Mato Grosso before Christmas. In the state of Parana it is expected that the soybean harvest will start about January 20th.