Heavy rainfall floods Brazil's Rio Grande do Sul

Market: Agriculture
03/05/24

Brazil's southern Rio Grande do Sul state continues to flood after heavy rainfall since 29 April, leading the government to declare an emergency yesterday.

The highest volumes reached the central areas of Rio Grande do Sul, with cities receiving rainfall of 150-500mm (6-20 inches), regional rural agency Emater-RS data show. The monitoring station of Restinga Seca city, in the center of the state, recorded rainfall of about 540mm.

Rainfall in Rio Grande do Sul overall surpassed 135mm in most of the state, according to the US National Oceanic and Atmospheric Administration (NOAA). Meanwhile, dry weather prevailed in other Brazilian regions.

NOAA expects rainfall to abate in the next week, but adverse weather conditions are set to remain.

As of today, 154 sections of 68 highways were totally or partially blocked, according to the state's emergency service.

The 100MW 14 de Julho hydroelectric plant also partially ruptured.

The Rio Grande port has not suspended operations, but handling is slower. Despite the heavy rainfalls, demurrage rates and waiting queues for docking and unloading were not altered. Demurrage rates were stable at $1/metric tonne (t) and the total cost for handling fertilizers remained at $19/t.

But market participants expect the situation to change in the coming days, which may increase demurrage rates. If the rain does not stop and the level of the Guaiba River continues to rise, some areas in the port are likely to flood in the coming days, as is the case in part of the Porto Alegre port.

Amid slower cargo release, logicitical difficulties and the already-low demand for fertilizer transport services, fertilizer freight rates on the Rio Grande-Dourados route, monitored weekly by Argus, fell by R20/t ($4/t), on average, to R225-250/t.

Excessive rainfall to damage 2023-24 soybean crop

Rio Grande do Sul is harvesting its 2023-24 soybean crop, set to be the second largest in the country this season.

Works reached 76pc of the state's expected acreage by 2 May, posting an weekly advancement of 10 percentage points despite the excessive rainfall, according to the rural agency Emater-RS.

Farmers seized shorter windows of more favorable weather — or when rainfall subsided — to intensify field activities, especially in areas expected to register higher yields and that were not deeply affected by a drought earlier in the year.

The moisture levels of grains harvested are considered above average and will require more investment in their drying processes. Some areas reported premature germination and plant decay because of the humidity excess.

Emater-RS maintains the state's average yields estimated at 3,329 kg/hectare, with recent results remaining within prior projections, according to the agency's weekly report released on 2 May. Thus, soybean production in Rio Grande do Sul is still set to reach a record 22.2mn metric tonnes (t).

But market participants agree that forecasts for the state may be revised down in the next weeks, as field surveys begin to accurately assess the excessive rainfall's total damages.

By João Petrini, Maria Albuquerque and Nathalia Giannetti

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