Grains –
It seems every other newswire article I see these days discusses the Brazilian road problems on the way to ports in the north. There seems to be some consensus thought process that this is a YUGE problem and the US could potentially see an increase in export business due to these logistical snafus. Well, for starters we need to acknowledge that just because Brazil is harvesting their crop is doesn’t mean US sales just stop. Of course we’re going to be picking up cargoes of sales here and there. Still, the market is concerned, so let’s look at the math.
The most recent article I’ve seen notes “about 1,500 trucks loaded with soybeans, of a total of 2,500 trucks, are halted” along the route. On second thought, however, these numbers don’t sound exclamatory enough so I’m just going to make up something…we’ll say 5,000 trucks of soybeans are halted on the route. Depending on who you ask, each truck probably holds 40-50 mt of soybeans, but again let’s just say 55 mt to be aggressive. Here is the math… 5,000 trucks x 55 mt = 275,000 mt. Again depending on how you want to work your math, that’s roughly 5 cargoes.
Does the market really want to throw a fit over 5 cargoes? Apparently it does. I’m not saying these articles are responsible for the strong price action (you can mostly thank Fund Bro for that) but they surely don’t hurt. Still, we’ll get official Feb export data probably today and it is likely to show ~6 mmt of soybean exports which would be a new record for the month. That would imply to me that the new crop export program is running smoothly overall, unless of course you’re the poor sap paying demurrage on a theoretical 5 cargoes in the north because you were counting on a bunch of trucks full of soybeans traveling through the rainforest on dirt roads.
The chart below shows a breakdown of soybean shipments by port in January of this year. The two northern ports represented here are Itacoatiara and Santarem. These comprise roughly 8% of Brazil’s total soybean shipments. Again, I’m not sure why this is such a popular story considering the south is running smoothly.
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