Brazil Revs Up Soybean Infrastructure

January 29, 2015 12:00 PM
Brazil Revs Up Soybean Infrastructure

When Brazilian producers begin their soybean harvest in earnest in mid-February, they will have access to a wealth of avenues for exporting the crop. That’s according to AgResource President Dan Basse, who says the country’s numerous investments in infrastructure will start to pay off in 2015.

Power Hour Noon Logo“Truck prices today, or the cost of moving those beans from the port, is one of the lowest we’ve seen in the last 10 years,” Basse tells host Chip Flory during the “AgDay” Agribusiness Update. “They are very competitive—a surprise—and so that’s helping at least for the moment keep the basis levels strong in Brazil. We are also liking what we see in terms of offloading. The Parnaiba corridor has put in three new loaders. They’re about 65% faster than a year before. There are three new ports in northern Brazil. So Brazil is really fixing its loading capabilities, and we think ship waiting times will be down substantially.”

Strong Harvest Outlook. AgDay reports Dr. Michael Cordonnier of Soybean and Corn Advisor has pegged Brazil’s soybean harvest is pegged at 93 million metric tons, down 500,000 metric tons from a previous estimate. Better yields in the southern part of the country might offset some drought-stressed fields in central Brazil.

In Argentina, Cordonnier says, good weather has led him to raise soybean expectations to 56 million metric tons, up 1 million metric tons.

Brazil Gains Attract China. As a result of Brazil’s infrastructure gains, Basse expects the Chinese will eventually reduce its premium for U.S. soybeans.

“We think that will erode over the years, as the United States needs to invest in additional logistics just like Brazil is doing,” Basse explains. The Chinese now are willing to switch from U.S. to Brazilian soybeans because of those logistics improvements, a far cry from two years ago, when China paid as much as $1 million per vessel in demurrage.

Soybeans also will continue to depart South America via the Amazon River.

“ADM and Bunge both have new facilities opening this year,” Basse notes. “They expect to export about 1.5 million to 2 million tons each. We’ve got an old citrus plant from Cutrale exporting citrus pulp. It’ll export about 2 million tons of beans. There’s lots of avenues for Brazilian beans to get out of the country.”

Click the play button below to watch the complete interview with Basse on the “AgDay” Agribusiness Update:

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