Mar 10, 2014
Brazilian Soybean Exports Set Record for Month of February
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
In spite of all the logistical problems in the interior of Brazil, the Brazilian ports managed to export 2.8 million tons of soybeans during this past month of February, which was a record high for the month. According to the Export Secretary (Secex), this was three times more than what was exported in February of 2013 (960,000 tons) and it surpassed the prior record of 1.5 million tons exported in February of 2012.
The month of February is effectively the start of the export season in Brazil because only 30,000 tons, or one small vessel, was exported by the end of January. The lineup of vessels at Brazilian ports indicates that 8 million tons of soybeans may be exported during the months of February and March combined.
After being heavily criticized for the extensive delays experienced at the Brazilian ports during the last export season, port officials made adjustments to their activities this year in an attempt to improve efficiencies and expand capacity.
At the Port of Paranagua they made two adjustments that should certainly help. First they limited the amount of corn that could enter the port after mid-January thus freeing up space for primarily soybeans. Secondly, they established an "express line" for vessels that were scheduled to load from a limited number of warehouses (a total of three), thus speeding up the loading process. This express line alone is expected to improve capacity at the port by 10%.
At the Port of Santos they established a protocol at which trucks are only allowed to enter the port after they are called in by the port. This will not improve the capacity of the port, but it will eliminate the long lines of trucks that traditionally clog the streets leading to the port. At the southernmost Port of Rio Grande, additional capacity has been added over the last year that actually allowed it to surpass the Port of Paranagua as the second largest soybean exporting port in Brazil.
While Brazil is poised to export a record amount of soybeans in 2014, there are two "wild cards" that could dampen the heightened expectations. The biggest disruptive factor at Brazilian ports is wet weather which suspends loading activities. The first half of February was very dry in southern Brazil and the dry weather probably contributed to increased loading activity. Going forward, any prolonged period of wet weather would certainly slow down export activity.
The second factor is labor unrest. There hasn't been any talk as yet concerning potential labor issues, but these labor disputes are an annual occurrence at Brazilian ports. Inflation is rising in Brazil and workers will be pressuring their employers to increase wages. On a side note, there may be temporary short-term disruptions lasting a few hours during the month-long World Cup tournament which will start in mid-June. If employers want to avoid potential problems with their workforce, they should consider suspending work activity during the time when Brazil's national team is playing.