RTRS - INTERVIEW-Brazil soy quality rises but logistical headaches worsen
Posted by Labels: Trader's highlightBRASILIA, Feb 26 (Reuters) - The quality of Brazilian soybeans is improving as rains that disrupted early harvest let up, the head of the national soy producer association said on Tuesday, but concerns are growing over long delays in getting beans through crowded ports.
The U.S. Department of Agriculture expects Brazil's production of soybeans to surpass that of the United States for the first time this season with 83.5 million tonnes versus 82 million, straining transport infrastructure to the limit.
Rains from early in the harvest in January slowed the flow of product from top soy-growing state Mato Grosso and many early-harvested beans are being sold at a discount due to moisture damage, Aprosoja's Glauber Silveira said.
"Mato Grosso is already starting to harvest better-quality grains now. Rains are easing," Silveira said during a guest appearance on Reuters Global Ags Forum, an online chat room for grain traders.
Brazilian weather forecaster Somar expects rains to continue this week in the key center-west region where Mato Grosso is situated, but then to shift to the south by early March.
Soy futures in Chicago for March delivery SH3 settled down 3-1/2 cents at $14.47-3/4 a bushel on Tuesday, pressured by prospects for a good South American harvest between Brazil and world No. 3 producer Argentina.
Though the weather has improved for harvesting, getting the crop to port would be a major hurdle, Silveira said. A truck shortage and clogged ports have led to queues of more than one month for ships to load even before peak harvest.
"The queues will get worse ... Costs for transport will without doubt keep rising," Silveira said, adding this burden would largely fall on trading houses. He estimated producers had forward-sold 70 percent of the crop, locking in their price.
"Producers who haven't sold yet may take a hit, though," he said, since traders facing higher costs would likely make lower offers to reduce the impact on their margins, which are being squeezed by spiking transport costs.
The soy sector says it is unable to speed this year's export flow, which is likely to be the most chaotic ever as record production is funneled through ports that have failed to expand in tandem with grains output.
New regulations this season have also restricted the hours truckers can spend behind the wheel each day, slashing road haulage capacity.
The opening of a river port in the north of the country, likely by next year, will provide some relief for next season. Critical rail and road projects costing tens of billions of dollars, however, will take several years to build.
Exacerbating the risks this year, unions representing the country's dock workers could resume strikes after mid-March unless the government modifies plans to reform port regulations, which they say could cost jobs and cut wages.
Silveira said logistics woes were eroding Brazil's edge over the United States in terms of production costs. He expected the two countries' output to be "neck and neck" and it was not yet certain Brazil would claim the rank of top producer this year.
"But I hope so!," he said.
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