Supply

Parana River Levels Shifting Volumes to U.S.

While recent dry, sunny weather has helped speed along harvest of Argentina’s soybean and corn crop, it has also further diminished water levels along the Parana River that is key for transporting grains to the country’s main export channels,” reports Pro Farmer’s Meghan Vick. “The situation has forced exporters to reduce loading and take extra time to top off cargoes farther along the river where water levels improve. 

Guillermo Wade, head of Argentina’s CAPyM port activities chamber, told Reuters, “In a Panamax ship you are talking about 10,000 metric tons (MT) less that each ship can carry.”  Eduardo Sierra, a climate expert with the Buenos Aires Grain Exchange, says the lower water levels is due to dryness in Brazil’s Sao Paulo and Rio Grande do Sul, and warns that Brazil is just now entering its dry season. 

Argentina is currently harvesting corn and soybeans and relies on some exports to create storage space. Loading vessels lighter requires more vessels to load the same quantity, which leads to a backlog of shipments. Global buyers will have to fill in for the reduced volume by turning to the U.S. or Brazil. Brazil’s currency devaluations have soybean and gain exports in full swing. On the other hand, the U.S. has plenty of available export capacity until mid-September to ship a few extra vessels. U.S. soybean harvest starts to fill export supply chains in late August and reaches full steam in mid-September as shown below. Although the extra export volume is limited, the increase in sales is welcome, especially this time of year. 

Graph Source: USDA
Alan Barrett
Alan Barrett

Director of Research and Consulting

Higby Barrett LLC

Alan Barrett is the Director of Research and Consulting for HIgby Barrett LLC. He is an accomplished commodity economist with more than 25 years of experience in futures and cash markets with a focus on cotton, commodity projects, non-traditional agricultural products, transportation and supply chain studies. Alan spent six years as a commodity futures broker. His expertise encompasses feasibility studies of oilseed crushing plants (soybean canola, and cottonseed), grain elevators, export elevators, shuttle elevators, grain container operations, flourmills and other processing facilities. Alan also has conducted transportation supply chain studies for grains, oilseeds, fertilizer, coal, natural gas, crude oil, and petroleum products. Alan has considerable experience in non-traditional agricultural products such as coal, coke, natural gas, chemicals, hydraulic fracturing fluid, hydraulic fracturing proppants, glycerin, fertilizer, micronutrients, salt, limestone, cement, iron ore, pig iron, and steel, especially feed ingredients. Mr. Barrett has a BS and MS in Agricultural Economics from the University of Tennessee.