International
Bloomberg

South America - Waterways Are Drying Up in Key South American Crop-Shipping Hubs

The South American drought that’s helping push corn and soybean prices to multiyear highs isn’t just threatening crops, but also the ability to haul them on waterways that are drying up.

On the increasingly shallow rivers that flow through top producers Brazil, Argentina and Paraguay, barges are carrying less than their usual load. The situation is so desperate in Paraguay that the country is asking neighboring Brazil to release water from the giant Itaipu hydroelectric dam, after vessels have run aground and logjams are forming in river ports because barges can’t move. In a key Argentine leg of the 4,900-kilometer (3,000-mile) Parana River, uncertainty over dredging work could make it even harder for farmers to ship their harvests. The region’s waterway crisis highlights the growing impact of a warming climate on global agricultural supplies that’s raising the specter of food inflation at a time of rampant demand led by China. The situation is bound to get worse because the dry season has just started. Argentina, the world’s top exporter of soybean meal for livestock feed and soybean oil for cooking, ships about 80% of its crops through rivers. In landlocked Paraguay, the region’s third-biggest soybean producer, roughly 80% of the country’s trade moves through inland watercourses. “This will be a difficult year for navigation,” said Esteban dos Santos, head of the Shipowners Association of Paraguay, where the world’s third-largest river-barge fleet after the U.S. and China is moving on waters that are 3 meters (10 feet) lower than usual. “Navigation channels are getting smaller and shallower every day.”

Near the Yacyreta hydroelectric dam in Paraguay, barges loaded with soybeans for export are stranded. The water depth of the Parana River there needs to reach at least 95 centimeters (3.1 feet) for them to proceed, but it’s currently at a third of that, Dos Santos said. Dryness has halted navigation since early April. Similar logjams are forming in other parts of the country. The basin comprising the Parana and Paraguay rivers and their tributaries derives its water mainly from sources in Brazil’s Center-South region, where the drought is pushing up prices for everything from corn to coffee and sugar. Even in stretches where vessels are moving, they are carrying less load to reduce their draft. In Rosario, a key Argentine shipping hub on the Parana where large ships load crop exports before heading to the Atlantic Ocean, water levels are expected to drop to about 1.17 meters (3.8 feet) this week. The historical average for this time of the year is 3.58 meters. The situation is getting worse every year because of consecutive droughts in Brazil, with insufficient rains during the wet season to replenish the rivers. “It’s going to be really difficult,” said Guillermo Wade, manager of port group CAPyM in Rosario. “We’re going to have shallow water levels that are going to affect the possibility of loading ships with lower drafts.”

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