Red flags up on corn, soybean logistics woes in Brazil’s northern rivers

The drought in northern Brazil is causing logistical concerns due to low water levels in key waterways in the Amazon basin, with grain and oilseed volumes already being diverted to south and southeastern ports, sources told Agricensus.

Trading houses are reportedly shifting volumes from the Northern Arc, which encompasses the land and water logistics network that links inland farms to ports in the north and northeast of the country, to the port of Santos in the southeast.

Volumes pivoted to the south are primarily corn, sources said.

“Traders are shifting logistics from Miritituba [where an important Northern Arc river port is located] to Rondonopolis, which has a railway that goes directly to Santos,” Victor Martins, the Latin America risk manager at Amius Ltd, told Agricensus.

According to sources, this is already having an impact on waiting times at the port of Santos. The wait has increased to 13-16 days currently from 8-9 days in the previous week.

According to Martins, these delays may jeopardize the pace of soybean exports through Santos, potentially benefitting US exporters during the October-February window.

Although the disruptions at Northern Arc river logistics arenot yet severe, there are concerns that a lasting drought could bring significant headwinds to Brazilian exporters.

“The [dry] seasonality of rivers in the Amazon region between September and December is historical and well known,” Hidrovias do Brasil, which owns port terminals that handle the transport of soybeans and corn through Amazon waterways, said in a note.

But the drought this year has been more intense, the logistics operations company also said, jeopardizing river water levels. Still, navigation operations in the waterways mostly used for transporting agricultural products have not yet been severely affected.

The situation is more serious in the Amazon River, which is not a traditional route for agricultural products.

At the end of September, the Brazilian Association of Cabotage Shipowners (Abac) said transport capacity through the Amazon River could fall by 50% by the end of October and, this week, port operations in Manaus were restricted due to low water levels.

Rains should return to the north by November easing logistical headwinds in the region, according to historical patterns.

This year, however, the likelihood of an El Niño weather pattern, which traditionally leads to drier conditions in northern and northeastern Brazil, could further hamper the transport of grain and oilseed through Amazonian rivers.