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Brazil’s crop logistics drama

With Brazilian exports of corn and soybeans expected to continue their strong performance in 2014, last year’s problematic port logistics are reccurring.

Recent data released by Brazil’s Ministry of Development, Industry, and Foreign Trade shows that the South American country exported 3.8 million tons of soybeans in September and 3.44 million tons of corn – both are records for the period. From January to September, soybean exports reached 40.7 million tons, already overtaking the output of 2013 in just nine months.

For the 2013-2014 season, Céleres consultancy has a projection that Brazil will have a soybean area of 74.1 million acres and a corn area of 38.5 million acres (including both the summer and winter crops). Respectively, the growth would be 3.3 million acres and 750,000 acres compared with this year’s crops. Mato Grosso, Goiás, and Maranhão are the states that are likely to get the largest slice of this increase. “Most of the growth is coming with the usage of genetically modified seeds and the price of soy in Chicago. If there is more news about bad weather in the U.S., the corn area can grow even more in Brazil,” says Anderson Galvão, CEO of Céleres consultancy.

With these bright perspectives for the area, there may be some question of how Brazil can ship all those grains. The scenes of last year – hundreds of trucks lined up in the port of Santos, São Paulo – are still fresh in our minds. In March, a strike of port workers generated a cancellation of a 2 million-ton order of soybeans by the Chinese company Sunrise.

According to the Brazilian Association of Ports and Terminals, there will be over $5 billion invested in the ports, but these private investments would take place in the next 10 years. Therefore, the current infrastructure would not change soon.

Brazil’s solutions

Part of the solution came from using more of the port capacity in Santarém in the state Pará and in Itaqui, Maranhão. From these towns, a slice of the center-west soybean production was shipped through the Panama Canal. However, several tons of grains were also shipped through the port of Rio Grande, Rio Grande do Sul – more than 1,300 miles from southern Mato Grosso.

Even with these setbacks, João Calos Kopp, CEO at JC Kopp Consulting, believes Brazil will still be seen as a reliable supplier. The orders cancelled by China in May were just a way to maneuver the market, Kopp believes.

“The good news that came out of the logistic congestion is that importers are wanting Brazilian soybeans. With record exports, our logistical problems remain with the inland infrastucture. Once the grains get to port, we send products out quickly,” says Kopp.

Glauber Silveira, president of the Association of Soybean Producers of Brazil (Aprosoja Brasil), wrote an op-ed piece listing the difficulties of Brazilian growers compared with their American counterparts. Silveira believes the much higher cost of the freight in Brazil is one of the difficulties, added by the cost of fuel and lack of storage in the country. The South American country is able to store only 74% of its grains, while the U.S. has 130% storage capacity.

Brazil could easily be headed for continuing logistical chaos in 2014, Silveira tells Successful Farming magazine.

“A government program that would give incentives for producers to purchase more silos has not advanced. Also, our doors (ports) to send the grains will be the same. We will see the same film, the same story,” argues Silveira.

To grow corn in the state of Mato Grosso cost 659 real (US $288.50) per acre in the 2012-2013 season. The projected cost for the 2013-2014 season is 689 real (US $301.63), a 4.55% rise. [Conversions calculated September 9, 2013.]

To grow soybeans, the costs are expected to rise by 26.5%. “We are going to lose $20 per ton,” says Silveira.

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