June 21, 2006

 

Corn gaining on soy at Brazil's no.2 soy port Paranagua
 

 

There has been more corn stored at the port of Paranagua than soy in the past two weeks of June, standing as a tell-tale sign of Paranagua's waning prominence as Brazil's no.1 soy exporter, judging by the daily data provided by the Paranagua Port Authority.

 

Soy trade has slowed in general since the 2005/06 harvest ended in April because of an unfavourable foreign exchange rate between the US dollar and Brazilian real, and farmer protests in March that shut down soy transport in three states, including no.1 soy producer Mato Grosso.

 

Brazil is far from being a major corn exporter, but thanks to demand from Iran and the Brazilian government's price guarantees, corn exports are on the rise from Paranagua, the country's no.1 corn-exporting port.

 

Andre Debastiani, a soy and corn market analyst at consulting firm Agroconsult, said corn exports have been helped by the government's minimum price guarantee programme, known as PEP. PEP is run as an auction. The government sets a price minimum of two to four Brazilian reals (US$1.45) above the market a 60-kilogram bag.

 

"So corn is going for 13 reals in Mato Grosso do Sul, but the government is willing to subsidise another 2 reals over that price, or as much as 4 reals, depending on how the auction goes. Corn producers are more likely to sell and exporters are more likely to export thanks to that subsidy," Debastiani said.

 

On June 16, there were 144,010 tonnes of soybeans waiting in the export corridor in the public storage facilities at Paranagua port, compared with 144,500 tonnes of corn. On June 14, there were 139,300 tonnes of corn in storage compared with 129,200 tonnes of soybeans. The same holds for the first week of June, when on June 7 there were 166,150 tonnes of corn in public warehouses compared with 126,880 tonnes of soy, according to the Paranagua Port Authority.

 

In May, Paranagua shipped 537,495 tonnes of corn compared with 547,227 tonnes of soybeans. Paranagua has lost prominence as Brazil's top soy export corridor after it banned genetically modified soy exports a couple of years ago. Ports in neighbouring Santa Catarina and Sao Paulo picked up the slack.

 

Brazil's corn exports are growing in volume. From January to May, Brazil shipped 1.2 million tonnes of corn out of Paranagua, compared with 547,932 tonnes in the same period last year, according to the Paranagua Port Authority.

 

At the same time, Brazil shipped 2.2 million tonnes of soybeans between January and May 2006 compared with 2.5 million tonnes in the same period last year.

 

In March, corn exports were relatively flat in comparison with March 2005, with 124,214 tonnes moved out of Paranagua. Soy exports, meanwhile, rose by about 18,000 tonnes to 865,000 tonnes. In April, corn exports ballooned to 376,115 tonnes compared with just 348 tonnes in April 2005, while soy exports fell by over 223,000 tonnes to 512,800 tonnes. Soy exports fell by 30,000 tonnes in May to 547,227 while corn exports rose to 537,495 tonnes in comparison with the 13,247 tonnes shipped in May 2005.

 

There is currently one ship docked at Paranagua loading some 55,000 tonnes of corn. On June 27, another ship arrives for another 57,225 tonnes of corn, according to the Paranagua Port Authority.

 

According to Transcar Maritime Shipping Agency, one ship is bulk loading 60,000 tonnes of soy at Paranagua as of June 18, but three more ships are due in over the next nine days to load similar volumes.

 

Brazil is the worlds no.2 soy exporter behind the US.