MercoPress. South Atlantic News Agency

Greater ports congestion forecasted in Brazil with record soy crop and delayed sugar shipments

“The real choke-point in Brazil’s infrastructure is the capacity to load grain at the ports”

Brazil’s delays loading soybeans for export may worsen in 2014 due to a bigger crop and as some grain facilities are used for sugar shipments, crop analyst Soybean & Corn Advisor Inc. said.

Waiting times for vessels may give U.S. soybean exporters a longer selling window and potentially lift US export volumes, Michael Cordonnier, president and owner of the Hinsdale, Illinois-based firm, wrote in an online report on Wednesday.

Brazil is forecast to harvest a record 88 million metric tons of soybeans in 2013-14, the US Department of Agriculture estimates. A fire at the port of Santos on Oct. 18 that destroyed sugar warehouses may mean some grain facilities will be used for exports of the sweetener, Cordonnier wrote.

“A good analogy for the infrastructure problems in Brazil is an hour glass,” Cordonnier said. “In 2014, the top of the hour glass is going to get bigger with a record large soybeans crop and the restricted part of the hour glass, which are the ports in Brazil, is going to get a little smaller in 2014 due to the fire at Santos.”

Brazil may export 1 million tons of soybeans by the end of February after early planting was delayed by a week, and the “real logistical problems” will start in March as the record crop starts heading to the ports, according to Cordonnier.

“The real choke-point in Brazil’s infrastructure is the capacity to load grain at the ports,” the analyst wrote.

Shipping problems and delays are “inevitable” because all of Brazil’s ports were already working at capacity, and the fire means a significant part of capacity at the port of Santos will be out of order for many months, the analyst said.

“The result could be longer waiting times for vessels and more congestion all throughout the system all the way back to the local grain elevators in the interior,” Cordonnier wrote. “If a vessel is forced to wait 60, 70, 80 days to load soybeans from Brazil, it could end up being cheaper getting the soybeans from the U.S. even if the price of the commodity is a little higher.”

An industry association said on Tuesday it expected record sugar cane production in Brazil in 2013-14, with an ever-growing share going to ethanol output. Unica, which represents 60% of the country's sugar cane producers and processors, said the harvest in the main producing region in central-southern Brazil should total 587 million tons, up 10.18% from the previous one.

“This is going to be a bumper crop. The sector is returning to normal after three years of major turmoil,” Unica president Elizabeth Farina told a press conference.

The association said its members' mills should yield as much sugar as last year (34 million tons) and significantly increase their output of ethanol, a sugar-based bio-fuel.