Brazil's 2024 grain, ferts freights unusually low
The slow pace of farmer selling for Brazil's 2023-24 soybean crop and lower liquidity in the fertilizer market have contributed to lower demand for transport services in early 2024, also raising concerns about a possible logistical bottleneck.
Demand to transport grains in Brazil usually peaks in the first quarter — increasing freight rates — because of the soybean crop harvest. Works in the current cycle have proceeded at a satisfactory pace, despite climatic problems brought by the El Nino weather phenomenon. The harvest in Mato Grosso state — Brazil's largest oilseed producer — reached 95.6pc of planted areas by the week ended 15 March, only 0.9 of a percentage point below the previous harvest and 0.6 of a percentage point below the five-year average for the period, according to the state's institute of agricultural economy Imea.
But crop sales have been slow. Farmers in Mato Grosso sold 46.3pc of the 2023-24 soybean crop by early March, 5.9 percentage points less than in the previous crop and 19 points behind the five-year average for the period, according to Imea. Lower oilseed prices in the international market have encouraged producers to slow the pace of sales.
As a result, grain freight rates during harvest time fell — which is unusual for this time of year — on lower demand for transportation services. Freight rates on the Sorriso-Rondonopolis route, bound for the rail terminal in Rondonopolis, reached R153/metric tonne ($31/t) in the first week of March, from R200/t in the same period in 2023.
In the corridors towards Miritituba, in Para state, via the BR-163 highway to the waterway transshipment point, the Sorriso-Miritituba route was at R253/t in early March, from R315/t last year.
The Querencia-Palmeirante route, to Tocantins state and then via rail to the port of Itaqui in Maranhao state, reached R260/t in early March, from R335/t last year.
The Rondonopolis-Paranagua route, bound south, was at R338/t in the beginning of March, down from R390/t in the same period in 2023.
Demand for fertilizer freights was also unusually lower in the first quarter. At this time of year, farmers typically receive large volumes of fertilizers to attend to their soybean harvest and corn planting activities.
But the purchase of inputs was also delayed as farmers postponed crop sales. With lower liquidity in the nutrient market, demand for transportation services was also lower.
In Paranagua, freight rates to Rondonopolis reached R234/t in early March, from R276/t in 2023. Freight costs to Sorriso stood at R318/t, from R348/t in 2023.
Freight demand for routes originating in the Santos and Cubatao ports, in Sao Paulo state, and bound to Mato Grosso, was also lower. Freight rates to Sorriso reached R365/t in March, from R385/t a year earlier. Costs to Rondonopolis stood at R255/t in the period, from R280/t a year prior.
In the Northern Arc, trends on routes from Sao Luis, at Itaqui, were similar. The Sao Luis-Querencia route reached R260/t, from R336/t in the same period in 2023. The Sao Luis-Porto Nacional stretch stood at R202/t, from R249/t last year.
This scenario concerns market participants, as it could create a logistical bottleneck. Soybeans will need to be shipped for exports eventually. In parallel, fertilizers arriving in Brazilian ports will have to be delivered to the domestic market.
That could lead to increased competition for trucks and a significant increase in freight rates, as well as longer queues at ports for loading and unloading ships, raising the logistics costs.
Related news posts
Pakistan's ECC approves urea imports of 200,000t
Pakistan's ECC approves urea imports of 200,000t
Amsterdam, 8 May (Argus) — Pakistan's Economic Coordination Committee (ECC) met on 7 May and has approved the import of 200,000t of urea for the Kharif summer season. The ECC did not disclose an exact timeline, but a tender will have to be issued shortly if the imports are to meet demand in Kharif, which runs from April to September with demand peaking in June-July. Pakistan occasionally enters the import market to plug supply gaps in key consumption periods. State-owned importer TCP previously agreed a deal with Azerbaijan's state-owned Socar in early December last year to source 200,000t of urea for arrival by 20 January. Domestic supplier Engro began maintenance at its 1.3mn t/yr granular urea Enven plant towards the end of April and is expected to return to production in mid-June. Pakistan's urea inventories started April at around 170,000t, but are set to be under significant pressure in June-July, data from the country's national fertilizer development centre (NFDC) show. Demand is set to hit over 800,000t in June and around 650,000t in July, outstripping typical domestic output of 520,000-555,000 t/month in the peak summer months. This has prompted the need for imports, given current stock levels. By Harry Minihan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Chile’s 1Q24 sulacid imports drop 19pc on port closures
Chile’s 1Q24 sulacid imports drop 19pc on port closures
London, 7 May (Argus) — Chile's sulphuric acid imports in the first quarter fell by 19pc on the previous quarter owing to heavy swells at Mejillones port. A total of 875,000t of sulphuric acid was imported in January-March, down by 19pc from 1.08mn t in October-December last year, GTT data show. They were also down by 15pc on the year. The drop was mainly down to heavy disruption at Mejillones, Chile's main import hub for sulphuric acid. The port, which hosts three sulphuric acid discharge terminals, was shut for a record 40 days in January-March owing to heavy swells. The port closures led to lengthy waiting times to discharge, with some ships experiencing nearly 3-4 weeks from arrival at the port, which resulted in high demurrage costs and a lack of spot demand. China regained its position as the key supplier to Chile, with imports rising by 19pc to 342,200t in the quarter, as Asian-origin cargoes looked economically viable owing to sliding fob values, while freight rates remained firm. Imports from South Korea rose by 34pc on the quarter to 145,300t, while Japanese shipments rose by 14pc to 114,300t. Chinese fob values averaged $16/t on a midpoint basis during the quarter, down from $32/t fob on a midpoint basis in the fourth quarter of last year. South Korea/Japanese fob values averaged $8/t on a midpoint basis during the first quarter, down from $31/t the previous quarter. Imports from neighbouring Peru dropped by 34pc on the quarter on a combination of logistical issues stemming from the congestion at Mejillones and some unplanned output issues faced earlier in the year by a supplier in Peru. Imports from European countries continued to slow in the first quarter, falling by nearly 60pc on the prior quarter, as heavy buying by key Moroccan buyer OCP and transport restrictions through the Panama Canal affected trade flows. Belgium was the largest European supplier to Chile, shipping 33,000t, compared with 86,000t the previous quarter. By Lili Minton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil unlocks relief spending to flooded state
Brazil unlocks relief spending to flooded state
Sao Paulo, 6 May (Argus) — Brazil's president Luiz Inacio Lula da Silva signed a decree to ease relief spending to Rio Grande do Sul state, which has been hit with historically heavy rainfall and floods. "We are going to do everything in our power to contribute to Rio Grande do Sul's recovery," he said today after signing the decree, adding that was only the first of "a large number of acts" for the state. The decree recognizes the state of emergency in Rio Grande do Sul and allows the federal government to grant funding and tax waivers to the state without having to comply with spending limits. In addition, it makes rules for public authorities to contract services and purchase products more flexible. The decree still needs both senate and congressional approval — which should be hasty, as both the senate and house leaders were present at the decree's signing. It is still not clear how much money it will take to rebuild the state, chief of staff Rui Costa and planning minister Simone Tebet said. But the minister of regional integration Waldez Goez estimated that it will take around R1bn ($200mn) to rebuild the state's highways. Rio Grande do Sul has been hit with heavy rainfall since 29 April. 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). State capital Porto Alegre is expected to receive more rain later this week, according to Rio Grande do Sul-based weather forecaster MetSul. MetSul warned that parts of the Porto Alegre metropolitan area could remain uninhabitable for weeks or months. The floods have left at least 83 dead and 111 missing, according to the state government. An additional 130,000 people have been displaced from their homes. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Floods halt firms' operations in Brazil's south
Floods halt firms' operations in Brazil's south
Sao Paulo, 6 May (Argus) — Several Brazilian companies have suspended operations in the southern state of Rio Grande do Sul because of heavy rainfall that has caused severe floods and infrastructure damage. Flooding from the record rains has left at least 83 dead with 111 people missing, according to the state government. More than 23,000 people have been forced from of their homes amid widespread damage, including washed out bridges and roads across several cities. The dam of the 100MW 14 de Julho hydroelectric plant, on the Antas River, ruptured last week under the heavy rains . Power generation company Companhia Energetica Rio das Antas, which runs the plant, implemented an emergency evacuation plan on 1 May. Brazilian steelmaker Gerdau that it suspended its operations in two mills at the state until it can ensure "people's protection and safety." The company did not disclose the produced volume of steel at those two mills. Logistics company Rumo partially interrupted operations and said that "damages to assets are still being properly measured". Petrochemical giant Braskem shut down its facilities at the Triunfo petrochemical complex as a preventive measure because of "extreme weather events" in the state, it said on 3 May. The company added there was no expected date to resume activities there. Braskem operates eight industrial units in Rio Grande do Sul that make 5mn metric tonnes/yr of basic petrochemicals, polyethylene and polypropylene, according to its website. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more