Drought set to disrupt Brazil river grain logistics

  • Market: Agriculture, Biofuels
  • 02/06/21

Brazil's worst drought in nine decades threatens to shut down soy and corn barge movements along the Tiete-Parana waterway over the coming months as the country moves into its dry season.

Brazil's biggest farming states of Goias, Mato Grosso, Mato Grosso do Sul, Minas Gerais and Sao Paulo have access to the 2,400km (1,491mile) waterway linking the two rivers through a lock-and-dam system served by riverine ports. The country just completed a record harvest of 135.4mn t of soybeans in the 2020-21 season and is about to harvest a projected record 106.4mn t corn crop over the coming months.

The national water agency ANA declared a water emergency for the Parana river basin on 1 June which will extend until 30 November. This allows the agency to restrict water use on rivers located in the basin.

As part of its efforts to guarantee hydroelectric generation, ANA warned that water transport, particularly along the Tiete-Parana waterway will likely be suspended. Transport on the waterway depends on maintaining reservoir levels for the Ilha Solteira (344MW) and Tres Irmaos (807.5MW) hydroelectric plants, which have been falling steadily.

ANA said that irrigation is unlikely to be suspended and that water for human and animal consumption would also be maintained.

The decision came one day after the electricity regulator Aneel created a special committee to monitor power supplies after hydroelectric reservoir levels in Brazil fell by 2.3 percentage points last month. Precipitation in all four of Brazil's grid systems was below historical averages last month, according to the grid operator ONS.

Transport volumes on the Tiete-Parana waterway were up 92pc at 416,000 metric tonnes in the first quarter from a year prior, with soy and corn making up a large portion of the cargo, according to the Sao Paulo state waterway department. Transport on the waterway was suspended for 20 months between 2014 and 2015 because of dry weather.

Underscoring the already low water levels in the region, the 14GW binational Itaipu hydroelectric plant completed an 11-day operation on 31 May in which it released additional water from its reservoir to allow Paraguay to export 125,000 t of soy via the Parana river below the dam's floodgates.

Hydroelectric power still accounts for over 60pc of Brazil's generation power generation capacity, making the country's power supply vulnerable to drought.


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