Connection Spring 2017 | Page 20

Floating elevator

By now all have probably seen or heard about the heavy rains that hit Brazil in late February and early March and the effects those rains had on Brazil ’ s famed main highway to the ports , BR 163 , and the resulting traffic stoppage that had occurred . Advance Trading , Bloomberg News and other news outlets reported that , at one point , more than 3,000 grain trucks loaded with soybeans were stuck on BR 163 and could not move because of the heavy rains and the resulting washouts and mudslides that occurred . That figure represents only the grain trucks , not to mention the other non-agricultural related traffic such as cars , buses and other trucks coming out of the port cities to the country . Additionally , that does not take into the account traffic impacted on Brazil ’ s other roads that feed into the country ’ s main agricultural highway .

All of this traffic stoppage on one of Brazil ’ s main highways came at a tremendous cost . Just looking at the impact that the cost had on the trading houses with cancelled orders , vessel demurrage and / or rerouting , loss of quality , etc ., it is an expected loss of more than $ 6 million . If this problem isn ’ t resolved quickly , estimates only go up as to what this financial loss could mean to those affected by strong weather events on an over-stressed transportation corridor . Some of these estimates place potential losses in excess of $ 112 million if the situation isn ’ t resolved and the entire season is affected .
One would expect this to provide a bounce to the U . S . soybean export market , as some of the trading houses that have been affected in Brazil have locations in the U . S . as well . Those trading houses in Brazil that do not have a U . S . presence will most likely try to reschedule shipments or buy in grain from the U . S . Of course , that is sometimes easier said than done . As one might imagine , if a Brazilian firm did have to move a sale to the U . S ., and a major export house did agree to sell them the Brazilian firm grain , it would most likely be at an extremely expensive proposition .
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By Joe Kelley
One option that exporters of U . S . grains do have access to are third party grain elevators . These grain elevators are not owned or controlled by a major grain export house but rather a third party , non-grain business . One company in