Soybean buyers to load with sugar vessels in Brazil as delay lengthens

Major soybeans importers are switching vessels that were previously assigned for loading sugar in Brazil to load soybeans instead, a move aimed at avoiding demurrage, sources close to the matter told Agricensus Monday.

Global agribusiness giants, including Wilmar and Cofco, were heard switching some of their supramax and ultramax vessels designated for transporting Brazilian sugar to load soybeans instead as delays at sugar-loading berths have mounted in recent days.

“(There have been) some vessel swaps from sugar to soybeans due to the long terminal line up,” one market source told Agricensus.

“The [ship] owner cannot tolerate this long line-up. So it is [to] swap to soybean loading instead,” the same source added.

Several major agricultural companies with both soybeans and sugar businesses are doing this, sources in the shipping industry informed Agricensus.

“Sugar and soybean use different berth and vessel type. Brazil does not have that many berths for sugar loading. So switching vessels from sugar to soybean is relatively easy,” said one well-placed source in the shipping industry.

Companies are switching the use of vessels to save costs of chartering as waiting in line to load sugar would spur demurrage costs significantly, two sources in the shipping industry explained.

Switching from loading sugar to soybeans could save the duration of chartering as there are more berths for soybean loading at Brazilian ports.

Sugar is typically loaded on supramax and ultramax vessels, while soybeans mainly use panamax-sized vessels.

“Supramax and ultramax rates have been rising sharply in recent days. This is directly correlated to congestion of sugar ports in Brazil,” the same source said.

This could potentially have a spill-over effect on soybean loadings in Brazil and consequently on soybean prices.

Spot prices of Brazilian soybeans on CFR China basis rose to a highest level in three months at $382.25/mt last Friday based on Agricensus assessments on a firmer Brazilian currency and freight.