Wildlife spotted in Sao Paulo river after removal of tons of trash

Bloomberg

The waterways in the most important South American crop shipping hubs are drying up

(Bloomberg) – The South American drought, which is helping to push corn and soybean prices to multi-year highs, threatens not only crops, but the ability to transport them on drying waterways. On the increasingly shallow rivers that flow through top producers in Brazil, Argentina and Paraguay, barges carry less than their usual cargo. The situation in Paraguay is so desperate that the country is calling on neighboring Brazil to release water from the huge Itaipu Dam after ships run aground and congestion in river ports because barges cannot move. On a key Argentine leg of the 4,900-kilometer Parana River, uncertainty over dredging could make it even more difficult for farmers to ship their crops. The waterway crisis in the region underscores the growing impact of a warming climate on global agricultural supplies that heighten the specter of food inflation in an era of rampant demand led by China. The situation is sure to get worse as the dry season has only just begun. Argentina, the world’s largest exporter of soybean meal for cattle feed and soybean oil for cooking, delivers around 80% of its harvest via rivers. In inland Paraguay, the third largest soybean producer in the region, around 80% of the country’s trade takes place via inland waterways. “This is going to be a difficult year for shipping,” said Esteban dos Santos, director of the Shipowners Association of Paraguay, which has the world’s third largest river barge fleet after the US and China on 3-meter-long waters) lower than usual. “The navigation channels are getting smaller and shallower every day.” Barges loaded with soybeans for export are stranded near the Yacyreta Dam in Paraguay. The Parana River’s water depth needs to be at least 95 centimeters for them to proceed, but it’s currently a third of that, Dos Santos said. The drought has stopped shipping since the beginning of April. Similar traffic jams are forming in other parts of the country. The basin, with the Parana and Paraguay rivers and their tributaries, draws its water primarily from springs in the mid-south region of Brazil, where the drought is driving up prices for everything from corn to coffee and sugar. Even on routes where ships move, they carry less load in order to reduce their draft. In Rosario, a major Argentine shipping center on the Parana, where large ships load crop exports before heading into the Atlantic, water levels are expected to drop to around 1.17 meters this week. The historical average for this time of year is 3.58 meters. Dredging is required to make the ship’s canal deeper. The situation worsens every year due to successive periods of drought in Brazil, with insufficient rainfall during the wet season to replenish the rivers. “It’s going to be really difficult,” said Guillermo Wade, manager of the CAPyM port group in Rosario. “We will have shallow water levels, which will affect the ability to load ships with shallower drafts.” According to Wade, a decrease in the maximum haulage – the vertical length that sinks under water – by one foot means a loss of 1,800 to 2,200 tons of load-bearing capacity, depending on the ship. The Parana River is on the verge of a crisis. A government contract with a joint venture led by Jan De Nul NV, the Belgian company that is digging the river bed and working overtime during the drought, expires this month and there is no clear plan to extend or replace it . Dredging workers are considering a strike to protest the insecurity. The waters that feed the Paraguay and Parana rivers flow south from the Brazilian states of Mato Grosso, Mato Grosso do Sul, Minas Gerais and Sao Paulo. In the state of Sao Paulo, there has been a lack of precipitation in every rainy season for the past 13 years. According to the Brazilian weather and climate center CPTEC, the rain in the first quarter of this year only reached half of the expected volume. In Mato Grosso, key areas that supply the basin have had below average rainfall for a decade. It was similar in Mato Grosso do Sul and Minas Gerais. Last year, Argentina had to ask Brazil to release water from the Itaipu Dam into the Parana River to increase the volume of water, which has hit its lowest level since 1989. Brazil sends most of its crops to seaports by truck or train, and soybeans transported in inland waters are more common in the plentiful northern Amazon basin, but some of the country’s river transport has been affected by the drought. In Corumba, near the southern border with Paraguay, where the iron ore giant Vale SA uses watercourses for export, barges travel with 20% less load due to the shallow depth. The problem will not be easy to solve and the harvest markets will likely have to adjust to logistical problems beyond this season’s harvest. “Depending on the rain, it can take a year or two for the rivers to recover,” said Francisco Catarino, partner at the river logistics company FJLC Consultoria in Sao Paulo. More articles like this can be found at bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

Comments are closed.