April 24, 2020 / 9:11 PM / a month ago

Argentina's ebbing Parana River costs grains sector $244 million: exchange

BUENOS AIRES (Reuters) - The water level on Argentina’s Parana River is at a near 50-year low, hampering export traffic on the grains superhighway and causing local industry $244 million in losses over the past four months, the Rosario Grains Exchange said on Friday.

FILE PHOTO: The shore of the Parana River, where the water level has severely dropped, is seen, in Rosario, Santa Fe, Argentina April 7, 2020. REUTERS/Stringer

With farmers now harvesting corn and soy, Argentina’s two main cash crops, problems caused by the river’s decline at the key ports hub of Rosario come just as the government needs export dollars and tax revenue to stay solvent and bolster an economy ravaged by the coronavirus pandemic.

The measurement index of the Parana river at Rosario hit a near-half-centry low of 0.4 meters on Wednesday, the grains exchange said in its report, “implying huge industrial and transport logistics problems at a cost of $244 million in the first four months of the year.”

That compares with a normal average reference depth of around 4 meters at this time of year.

The problem has cut the amount of recently-harvested corn and soy that can be loaded at the Rosario ports hub, where about 80% of the country’s farm exports are loaded.

The low water level is forcing ships to take extra time to top off their loads farther south at the deep-water ports of Bahia Blanca and Necochea before heading out to sea. The arrival of soybean shipments from neighboring Paraguay, which are crushed into meal at Rosario, have also been slowed.

Argentina is the world’s No. 3 soybean and corn exporter, as well as its top supplier of soymeal livestock feed used to fatten hogs, cattle and poultry from Europe to Southeast Asia.

Disruption in shipments from Argentina can throw off global trade flows as importers look to rival suppliers like Brazil and the United States to fill supply gaps.

DROUGHT IN BRAZIL

Weeks of sunny weather have helped farmers on Argentina’s Pampas grains belt collect soy and corn by making fields firm enough to support heavy harvesting combines as collection of the 2019/20 crop picks up speed. About half this season’s soy has been harvested so far along with about a third of its corn.

The problem started upriver in Brazil, where dryness has contributed to lower water levels along the Parana. The neighboring country has agreed to release water at the Itaipu hydroelectric dam to raise the level, according to Argentina.

But the effort has been hampered by dryness in the Brazilian states of Sao Paulo and Rio Grande do Sul, meteorologists say.

“The drought in the southern part of Brazil and northern Argentina is preventing vessels from being fully loaded. That creates logistics stumbling blocks,” said an Argentina-based executive with a major grains export company.

The biggest cargo ships that go through Rosario, with a total capacity of 50,000 tonnes, are having to leave port with 10,000 tonnes less than normal as the low water level complicates basic navigation.

“The line-up of ships on the Parana is getting longer. So it is taking more time to load less merchandise,” said the export executive, who asked not to be named due to the sensitivity of the matter.

“That costs money, especially in the middle of the harvest.”

Reporting by Hugh Bronstein and Maximilian Heath; Editing by Tom Brown

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