As this year’s soybean harvest neared, Brazilian farm leaders feared logistical chaos would once again blight export efforts.
With no significant improvements to port, rail or road services since last year, they warned there could be a repeat of the partial breakdown of the soybean transport system seen in 2013 when ships waited up to three months to load at Santos and trucks lined seven miles back from port.
But two months into the current season, Brazil’s logistics appear to be coping much better.
The reasons for the improvement have as much to do with luck as judgment.
Firstly, a decline in January and February exports of second-crop corn opened more space for early season soybean exports at Brazilian ports.
Early harvesting of soybeans in Mato Grosso allowed exporters to take full advantage of this window and exports in late January and early February were well in excess of what has ever been seen before.
Meanwhile, smoother management of ship loading and dry weather has accelerated operations at port.
The net result is that February and March soybean exports were double those registered last year at 9.0 million metric tons (mmt).
New truck line management systems at Paranagua and Santos have reduced the wait at port, helping prevent truck haulage costs from exploding as some feared.
The cost of sending a ton of soybeans by truck from Sorriso, Mato Grosso, to Santos port jumped to R$307 ($137) in February, up from R$275 in the same month one year before, according to the Mato Grosso Agricultural Economy Institute (IMEA). But since then, freight rates have actually fallen. In March, normally one of the busiest months, the average rate on this route was R$300, lower than the R$305 registered in March 2013.
Going forward, it will be an external factor that has perhaps contributed most to the easing of pressure on Brazil’s logistics: Weak Chinese demand.
China cancelled a series of Brazilian shipments recently, which will likely mean April and May exports may come in below last year’s figures.
Ship line-ups back up this idea.
At Santos, ships were named to load 1.86 mmt of soybeans and soymeal as of Tuesday, nearly half the 3.3 mmt named at the same point last year, according to SA Commodities, a local shipping agent.
At Paranagua, ships were named to load 3.4 mmt of beans and meal, down from 4.7 mmt at the same point last year.
Oil World, a Hamburg-based consultancy, forecasts soybean shipments out of Brazil will total just 5.5 mmt in April, down from 6.2 mmt in the same month last year
Logistics costs had been eating an ever-larger portion of Brazilian soy margins in recent years. It remains to be seen if Brazil will use the respite to improve logistics for next season.