Brazil is a big part of the resources and food story. Dependability of infrastructure is part of it. For instance on the food train wreck front:
Brazil's Paranagua port grain truck line bodes ill
Reuters, 01.27.04, 1:36 PM ET
By Reese Ewing
SAO PAULO, Brazil, Jan 27 (Reuters) - The 26-kilometer line of grain trucks that backed up from Brazil's main grain port of Paranagua over the weekend due to rain does not bode well for the approaching soy harvest peak, analysts said on Tuesday.
"What's stunning is that these are corn trucks, some wheat. The soy harvest hasn't even started coming into the port," soy analyst Flavio Franca at Safras e Mercado told Reuters, but added that ships are arriving this week to load new-crop soy.
Brazil, the world's No. 2 soybean producer, relies heavily on Paranagua from February to September to ship its massive soy, corn and sugarcane crops abroad. Extended delays can cost traders dearly.
In March 2003 during the peak of Brazil's soy and corn harvest, trucks queued for up to 120 km (75 miles) outside Paranagua, while vessels waited up to 30 days -- at the cost of $20,000 a day -- to berth.
Brazil's soy crop should rise to 60 million tonnes from 52.5 million last year, and analysts say the port has not made the necessary investments to expand its capacity to handle Brazil's exploding agricultural output.
The unexpected truck queue started after rains interrupted operations of Paranagua's uncovered ship loaders -- one of the main reasons for last year's backlog.
Monday night after the rain let up, 356 trucks were able to unload, a port spokeswoman said on Tuesday, adding that the hold-up in loading was over and the private port operators such as agricultural poiwerhouses Bunge Ltd. (nyse: BG - news - people), Archer Daniels Midland Co. (nyse: BG - news - people) and Cargill Inc. were now operating normally.
"It's probably going to rain at some point in March and April when harvest is in full swing," Franca said.
The highway patrol along BR277 leading to the port said the line of trucks parked along the shoulder had reached 26 kilometers on Tuesday morning.
"With a bigger soy crop and tight warehouse space, there is potential for delays to be worse this year, certainly," grains analyst Andre Pessoa at Agroconsult said. "Only about 1 to 2 percent of the new soy crop has been harvested so far."
He said he was also concerned with the size of the old-crop stocks of soy, corn and wheat, all of which were higher than normal after record harvests last year and producers' slow sales last season.
"The old crops will have to be moved. There just won't be enough warehouse space as the new corn and soy crops come in," Pessoa said. "The lack of storage space encourages producers to use trucks as mobile silos."
SOME GOOD NEWS
The planting season was favored by early rains, which will allow for a well distributed harvest period, unlike last season when drought delayed planting and concentrated harvesting, the analysts said.
"It should help at least that the harvest should be better distributed or smoother than last year," Franca said.
Pessoa also said China would not likely need to import large quantities of soybeans from Brazil in the coming months, like last year, because of the massive purchases the world's largest soybean importer made from the U.S. crop recently.
"The delays won't be as bad as some scenarios are making it out to be. This change in behavior by the importers should allow for a more extended shipping period," said Pessoa. |
