International News Detail
Record Brazilian soy crop clogs portsRecord Brazilian soy crop clogs ports
Soybean production in Brazil will climb to a record even after drought hurt supplies in the world's largest shipper, prolonging port congestion, according to Gavilon Group, the trading company based in Omaha.
The harvest will rise 6 percent to 86.5 million metric tons this year from 2013, said Frederico Humberg, country managing director. The wait time for loading at Port Paranagua, Brazil's second-largest, is 75 days compared with as much as 125 days last year and about 20 days in 2012, he said in an interview.
Brazil overtook the U.S. as the largest exporter last year after more than doubling the crop since 2000, straining infrastructure in the second-biggest emerging market.
"There's very little investment in infrastructure that has been authorized by the government and the environmental agency," Humberg said in Singapore Tuesday. "Production grew so much and the infrastructure couldn't catch up."
Surging demand for soybeans in China, the world's largest buyer, has helped to propel a jump in South American harvests and exports. But those estimates of Chinese demand began falling apart last week, and soybean prices dropped from a February rally.
Combined soy output in Brazil and Argentina was 142.5 million tons in 2013-2014, or 50 percent of the global crop, U.S. Department of Agriculture data show. While the U.S. harvest rose to 89.5 million tons from 66.8 million over 10 years, but its global share contracted to 31 percent from 36 percent.
About 11 million tons of soybeans, soybean meal and corn are waiting at ports across Brazil, compared with a peak of 14 million tons in July, said Sao Paulo-based Humberg. That figure is "still a bad one and it shows on the wait time," he said.
Humberg cut his soybean crop forecast by almost 4 percent from 90 million tons because of the drought in Brazil. The Brazilian unit of Gavilon will ship about 3 million tons of mostly soybeans and corn this year, from 1 million in 2013, with about 80 percent of exports going to China, he said.
Given the long distances between Brazil's major soy-growing regions and its ports, investment in infrastructure remains pivotal if the country is to keep expanding production and exports while remaining competitive, Andy Duff, an analyst at Rabobank International, said in a report last month.
Marubeni, a Japanese firm, bought Gavilon last year to boost its grain-trading capacity as global food demand increases, led by China. The country will import 72 million tons of soybeans in 2014-2015 from 68 million tons a year earlier, the USDA says.
Soybean prices rose 8.4 percent to $14.0125 a bushel on the Chicago Board of Trade this year as forecasts for the Brazilian crop were cut, bolstering the outlook for U.S. supplies. Prices have since fallen to $13.90. U.S. inventories will reach "critically low" levels by the end of the season, Goldman Sachs said in a March 10 report