Low water levels in Paraná River drive up soyabean oil and biodiesel prices in Brazil
21/10/2024 (Oils & Fats International) - Declining water levels in the upstream sector of the Paraná River, in Argentina, due to the dry season, have disrupted water transportation and led to increased prices for soyabean oil and biodiesel in Brazil, Palm Oil magazine wrote.
This had impacted the vegetable oil supply chain in the region and affected international trade, the 7 October report said.
According to data from maritime agencies T&T and Antares, the depth of the Paraná River at San Lorenzo, Argentina – a key hub for soyabean oil transportation – dropped to 9.44m on 20 September, the lowest level since January 2023.
As a result, palm oil traders had been forced to reduce the capacity of tanker ships docking at Argentine ports by 5%-12.5%, according to market sources in Argentina quoted in the report.
For example, if tanker ships reduced their capacity by 12.5%, they could only transport around 28,000 tonnes of soyabean oil, compared to the usual 32,000 tonnes.
This shortage has led Brazilian traders to seek additional volumes to meet export demand, according to the report.
Domestic soyabean oil demand in Brazil had increased following the country’s increase in its biodiesel blending mandate from 12% to 14% in March.
According to Brazilian Association of Vegetable Oil Industries (Abiove), soyabean oil exports in 2024 could total 1.15M tonnes – almost half of the previous year’s export volume.
Meanwhile, severe drought conditions in northern Brazil had also lowered water levels on the Tapajos waterway, bringing grain shipments to a standstill, World Grain wrote on 11 October.
Linking Brazil’s central and north regions, Tapajos is an important corridor to transport grains from leading agricultural states, including Mato Grosso – Brazil’s top soyabean producer – to ports in the Amazon region.
Brazilian port terminal group Amport, which represents companies such as Cargill and Louis Dreyfus, told Reuters that barge convoys carrying grain in the Tapajos had been halted since 4 October but were expected to resume in November if rainfall increased as forecast.
To safely resume navigation, Amport said companies were waiting for the river to rise by at least 20cm (7.9in).
Drought conditions had also halted shipping of grains in September through the Madeira River, another important grains corridor for Brazil, the world’s leading soyabean producer and exporter and second largest for corn, World Grain wrote.