Brazil, a leading producer and exporter of a wide range of crops, is also the world’s largest soybean producer and a major supplier to China. However, Brazil’s soybean exports this year can be difficult due to various factors such as continued rainfall during harvest, disrupted road transportation, and delayed schedule of loading at ports. With the delay leading to extended voyages and elevated risks of heat damage, it is unlikely for carriers to deliver cargo in good order and condition at the discharging port.

I. Rain season impact

A drought from September to October 2020 has slowed the seedling and planting process of Brazilian soybeans, while the excessive rainfalls that followed resulted in a late harvest at the end of February 2021. As of March 4^th, only 35% of the projected acreage had been reaped (49% same period last year), which is the slowest pace in a decade.

Brazil-based consultancy AgRural slashed its Brazilian soybean crop estimate in a new report released on March 8^th as the harvest progress is slowed down by rains. The rainfall across Mato Grosso and areas in the North and Northeast regions in the last few weeks has brought serious concerns about the quality of the beans. In Tocantins state, for example, the cumulative rainfall in February was 615 mm, much higher than the 300 mm average for this time of recent years. In the State of Mato Grosso where nearly 25% of country’s soybean are produced, rains are only slightly higher compared to previous years yet not showing any signs of relenting.

Constant rains during harvest will definitely affect bean quality. Damp conditions have caused a considerable part of the crop to abort flowers and pods, to sprout or even to rot. It is reported that moisture content of newly harvested beans in some production areas is up to 20-30%. Some producers even warn the traders that either accept the 20% losses of yields or nothing.

In addition, the large amount of soy leaving fields with high humidity has caused lines of trucks at warehouses because the standardization of the batches has been consuming more time due to excess damp.

II. Delayed road transportation

Transporting harvested soybeans to ports is also a great challenge. Despite improved railway infrastructure and conditions of canal transportation in recent years, most Brazilian producers and exporters depend heavily on road transportation and nearly 60% of the Brazilian soybeans flow out through highways. About 2/3 of highways in Brazil are in poor conditions except for BR-163, an extensive longitudinal highway known as the “Soya Highway” linking the Mato Grosso producing areas to the Northern and Southern Arc ports.

Torrential rainfalls this season have made the situation worse. Let alone potential traffic accidents on muddy roads or mudslides in rainy weather, there can be significant risks of traffic jam with one single truck got stuck, leading to lengthy period of transportation and increased chances of cargo heat damage.

III. Congestions at discharging ports

Given the prolonged soya bean crop cycle and road transportation delays, the volume of soybeans to be shipped has been increasing – over 16 million tonnes every week ever since the end of February. However, only 8% of the exports have been loaded as of 15 February. Vessels have been waiting at Brazilian ports for an average of 2-3 weeks and some for over 6 weeks (eg. CM waited 48 days at Santos before loading).

The Brazil Ministry of Commerce and Trade said that an average of 483,000 tons of soybeans are loaded daily in the first week (5 working days) of March, which is at about the same level with the 493,000 tons in the same period last year. Soybean exports were at around 2.42 million tons for the first week of March this year and 10.85 million tons for the entire March last year. It is estimated that about 15 million tons will be shipped in March this year.

Most of the soybeans being shipped out from Brazil are on their way to China. Another round of waiting in discharging ports now seems inevitable. It is said that some of the ships arriving in Rizhao in mid-February loaded with soybeans or corns have been waiting for two or even three weeks before unloading.

IV. Advice to Members

Temperature, moisture content and transportation period are key factors in heat damages of soybeans in transit. Considering the late harvest, the highway condition and the port congestion, the soybeans’ journey to China this year has been consumed with rainwater and time losses. There is probably no way to find out about the actual quality of the beans until they are finally discharged.

The author believes that the possibility of heat damage during voyage can be high, and the number of heat damage incidents is likely to increase this year. With the high value of soybeans cargo and the surging market price, times about 60,000 tons for each shipment, it will be tens of million losses in the case of a heat damage claim.

Although it is agreed in practice that heat damage of soybeans is often caused by the inherent quality (moisture content, temperature, etc.) of the cargo at the time of loading, and ventilation does not necessarily prevent the cargo from deterioration, cargo owners tend to hold carriers liable on account of improper ventilation during the voyage and it is difficult for the carriers to defend with the condition and nature of the cargo.

Therefore, with the quality of Brazilian soybeans remains uncertain this year, the Association hopes to remind our Members of the following things to cope with the situation and safeguard their interest.

(1) Carefully inspect the cargo to be loaded at the loading port and refuse any cargo that is mouldy or deteriorated. Consider engaging experienced surveyors or experts for advice if in doubt about whether the cargo is fit for shipment.

(2) Ventilate according to the Dewpoint Rule or the Three Degrees Rule during the voyage, and record in detail the temperatures of air and seawater, the time ventilation starts, stops, restarts and the measures taken at each hold.

(3) If the cargo cannot be discharged on a timely fashion, the crew must closely monitor the condition of the cargo in the holds and keep records accordingly. Please notify the Association immediately if the receiver claims that there is heat damage going on, or if the master believes that such damage has occurred to the cargo. The Association will make necessary arrangement of cargo survey for future claims.

For more information, please contact Managers of the Association.