Dec 18, 2013

Brazilian Officials Confident New Export Season Better than Last

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazilian officials at the Port of Paranagua have expressed confidence that the new export season in Brazil will not be a repeat of last year's debacle. While port officials are confident, many in the private sector are taking a more cautions wait and see approach.

At the height of the delays last June at the Port of Paranagua there were 110 vessels waiting to berth and some had waited up to 60 days or longer. There were several factors that combined to make last year's shipping season a real mess. Rainy weather caused many of the delays because all loading operations must be suspended when there is a threat of rainfall. A lack of dredging over the years resulted in a shallow draft which restricted some of the vessel movements to high tides. Additionally, when most vessels load at the Public Corridor at the port they stop at several different terminals to load grain from different exporters. This switching back and forth between terminals resulted in a loss of 9,000 hours of loading grain.

To make the situation even worse, the drought plagued U.S. crops in 2012 left importers desperate for grain from Brazil early in the shipping season resulting in shipping companies sending vessels to Brazil earlier than normal to insure their place in line at the port. Of course, this just made the congestion even worse.

What is on everyone's mind is will 2014 be a repeat of last year or will things be better in 2014. Port officials were stung by the widespread criticism of how they handled last year's crop so they have made some improvements this year. Below is a list of things that should make a difference at the Port of Paranagua in 2014.

It all looks good of course on paper, but the proof will come later next year when a record large soybean crop starts flowing to the ports. If everything works right and there are no major accidents like the fire that occurred at the Port of Santos in October and the weather is dryer than last year, then they may get lucky and have a good export season.

One of the best ways to avoid the congestion at Paranagua is to shift some of the export activities to other ports in Brazil and that is exactly what is happening. As I have been writing about for several weeks, a small portion of Mato Grosso's soybeans will now start to be exported out of ports on the Amazon River and in northeastern Brazil. This trend will accelerate over the next few years as highway BR-163 is completed to the Amazon River and a barging operation on the Tapajos River gets up and running.