BUENOS AIRES (Reuters) – Decade-low water levels in Argentina’s Parana River, a key thoroughfare for grains shipments, are forcing exporters to load less merchandise on ships, adding a new problem to a sector already beset by bottlenecks due to the coronavirus pandemic.
The Parana is Argentina grains superhighway, carrying Pampas grains belt agricultural exports from the Rosario ports hub to the shipping lanes of the South Atlantic. Argentina is the world’s top exporter of soymeal livestock feed and the No. 3 supplier of corn and raw soybeans.
However, water levels at an 11-year low are limiting the amount of grain ships can take.
“Cargo ships are still loading, but instead of loading what they normally would at this time of year, about 34 feet deep, today they are loading at 31 feet,” Guillermo Wade, manager of the CAPyM port operators chamber told Reuters.
Measured in tonnes, those 3 feet (0.91 m) mean a cut of about 7,500 tons of cargo on a Panamax ship, Wade explained, noting that in the case of a Handymax ship the loss of cargo would be 5,400 tons.
The low water levels, which could get even worse, come at a tough time for the grains exporter.
For weeks, the government been negotiating with municipal authorities to allow cargo trucks to pass through their jurisdictions. Dozens of local mayors have pushed back against a decree saying export-related activities were exempt from a nationwide lockdown aimed at slowing the spread of the virus.
Exports fell in March and may drop again if truckers, stevedores or other port workers are diagnosed with the coronavirus. Argentina is relying on agricultural export dollars and tax revenue as it struggles with the economic fallout from the pandemic and manages more than $100 billion in debt the government calls unsustainable.
April is peak soy and corn harvesting season in Argentina. The country is expected to produce 50 million tonnes of corn in the 2019/20 crop year and 49.5 million tonnes of soybeans, according to the Buenos Aires Grains Exchange.
The exchange said on Wednesday that 16.2% of Argentina’s soy area has been harvested so far and 26.3% of its corn area. In its weekly crop report, the exchange warned that it may lower its corn estimate due to low yields caused by dry weather.
Due in part to dryness in southern Brazil, the Argentine National Institute of Water, INA, said its indexed level of the Parana around Rosario is currently about 1.05 meters, against a typical average level for April of 3.76 meters. INA added the depth is expected to continue to drop in the near term.
INA’s measuring system uses zero as a reference point that does not refer to the actual depth of the riverbed.
INA forecasts show the Parana at Rosario dropping further to 0.98 meter next week and potentially reaching 0.9 meter by April 21, which, according to Wade, could mean the loss of an additional foot in cargo from ships’ holds.
The Rosario grains exchange said in a report on Wednesday that areas in Brazil affected by the lack of rain were not expected to get significant precipitation until mid-month.
“And even if this happens, the flow of water can take up to 20 or 30 days to be reflected in a water levels here in Rosario,” it said.
(Reporting by Maximilian Heath and Hugh Bronstein; editing by Jonathan Oatis and Lisa Shumaker)