Brazil Ports Struggle as Coffee Flow and Sugar Face Delays
Record Volumes and Increasing Rains Pose Challenges for Brazil’s Export Hubs
Brazil’s commodities export hubs are facing challenges as they grapple with record volumes of soy, corn, and sugar that need to be transported, coinciding with the time of the year when rains typically increase in southern ports. Traders, analysts, and shipping data all point to delays in coffee shipments due to a tight availability of trucks and containers, leading to additional costs for traders and delays in reaching their destinations.
Delays and Additional Costs for Traders
Exporters have reported delays in coffee shipments due to a shortage of trucks and containers. Loading waiting times for vessels have also increased, resulting in additional costs for traders and further delays for commodities to reach their intended destinations. These challenges have been compounded by rains in the south, the largest ever delivery of sugar on the expiration of the October contract in New York, and the diversion of cargoes from northern ports to Santos port due to reduced water levels in the Amazon River caused by a drought.
Container Availability and Increased Usage
Traders have raised concerns about container availability, with the chief trader of a large coffee exporter noting that the situation has slowed exports in September. The sugar industry is also experiencing reduced container availability, as the use of containers for sugar exports has surged by 86% compared to the previous year. In contrast, the number of containers used for coffee has decreased by 5%. Raw sugar is typically shipped in bulk, while refined sugar requires containers for transportation.
Increased Waiting Time for Bulk Carriers
Shipping agency Williams has reported a significant increase in waiting times for bulk carriers. At CLI, a major sugar terminal in Santos, the waiting time has risen from 17 days in September to 33 days as of Wednesday. As a result, some sugar shipments scheduled to depart Brazil in October may be pushed to November, according to ING analysts. Despite these delays, buyers were already anticipating the situation, although the impact of heavy rains could potentially complicate matters further. The forecast predicts light rains in the coming days at Santos, with heavier downpours expected from October 28.
Overall, Brazil’s commodities export hubs are facing a challenging period due to the high volumes of soy, corn, and sugar, coupled with the onset of rainy weather in southern ports. Delays in coffee shipments, reduced container availability, and longer waiting times for bulk carriers are all contributing to additional costs and disruptions for traders. It remains to be seen how the situation will evolve, particularly with the forecast of heavier rains in the coming weeks.