Exporters' logistical log-jam

10 Mar, 2014 03:00 AM
The sheer volume of harvest is really delaying grain movement through the terminals.

THE export supply chains in two major exporting nations are struggling to cope with a combination of adverse weather and large export orders.

Rabobank grains analyst Graydon Chong said the much-publicised woes in Canada were due to a combination of that nation’s record grain harvest and a bout of poor weather throughout the start of 2014.

He said it was having an impact on near term grain prices as marketers sought to meet obligations from other origins.

“It’s having an impact on prices, as the sheer volume of harvest is really delaying grain movement through the terminals,” Mr Chong said.

He said Canada’s tough winters often slowed up grain deliveries to port, but this year, exporters had cut time frames fine due to the demands on shipping capacity.

When the cold snap hit, delays quickly mounted.

Mr Chong said Canada’s storage system also contributed to the problem.

“A lot of grain in Canada is stored on farm and then loaded directly onto trains, there isn’t as much bulk storage on the railheads, so that system relies even more on timely movements of grain and when that doesn’t happen it can get congested.”

Mr Chong’s colleague, Brazilian agriculture analyst Andy Duff said supply chain issues in Brazil were due more to input pricing than weather.

“Diesel prices in Brazil have risen three times since the beginning of 2013, with the most recent hike of 8 percent at the end of November 2013," Mr Duff said.

“Given the long distances between major crop production regions and the country´s ports, sustained major investments in infrastructure over the coming years remain pivotal if the country is to continue to expand production and export volumes while remaining competitive.”

Mr Duff said it was likely there would be further port bottlenecks in Brazil again this year.

“Although Brazil is slowly addressing its bottlenecks, this will take years.

“For 2014, with higher fuel costs and another large grain harvest, logistics costs for Brazilian agribusiness are unlikely to decline”.

Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
Date: Newest first | Oldest first


Jock Munro
10/03/2014 9:58:14 AM

Could the mess in Canada be due to the loss of their single desk arrangements and a single body to manage the export task?
10/03/2014 1:30:18 PM

Nice try Jock. These rail lines are used by the oilsands producers as well as the potash producers. Despite the logjam, their costs are still cheaper than Australia's. Competition brings cheaper prices on inputs and higher prices for outputs
11/03/2014 8:45:35 AM

eh Jock we don't have a Single Desk either but our logistics and prices are just fine. Unless you are an unsubsidised NSW grain farmer of course.
Jock Munro
11/03/2014 9:16:22 PM

Dee 8, On one hand you free marketers say that competition (farmers competing against each other) increases your grain prices and on the other you say that it decreases logistics charges! Well in the real world our grain prices are less(as stated by the Asian end user) and here in the East our logistics charges have increased since deregulation.
X Ag Socialist
12/03/2014 9:16:41 AM

Jock its about time you looked at the tariff and import restrictions placed on some but not all wheat end users in Asia what they pay and what we get are quite often two different things.
Jock Munro
12/03/2014 2:29:45 PM

X Ag Socialist, perhaps you should ask Cargill and the other mega merchants that control our crop what they get and what we farmers get. Interestingly, the end users would much prefer to deal with grower organisations such as the grower owned and controlled AWB Ltd then the giant merchants. Obviously the merchants exert their power on both the supply and demand side.
X Ag Socialist
13/03/2014 1:25:34 PM

Wrong, Jock, it's mostly the importing country's farmers who are exerting power.
13/03/2014 2:32:09 PM

The mega merchants are offering me $320/t today for 14/15 noodle wheat. I hope they continue to be profitable so they can bring their bids back next year and the year after that.
Jock Munro
14/03/2014 3:40:54 PM

And you are carrying the risk dee 8. Be careful or you will lose your inheritance.
17/03/2014 6:02:13 PM

Jock this may surprise you but there are non deliverable products called SWAPS which you can freely move in and out of if seasonal risk enters your production. One of these days your bank manager will explain how to use them so you have something to pass onto your kids.
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