Logistics costs in Argentina rise by 300% due to low levels of Parana river: BCR

Logistics costs for Argentine exporters and traders have increased by 300% due to historically low water levels of the Parana river, the Rosario Grain Exchange, or BCR, said Aug. 5, which is likely to hamper the country's grain supply and impede price competitiveness of its agricultural exports in international markets.

As of Aug. 4, the level of the Parana river at the key grains export hub of Rosario was 20 cm below the sea level against the historical average of 2.92 meter for the month, the national water agency INA said. Normally, around 80% of Argentina's agricultural exports are shipped from Rosario.

However, as the downspout affected navigation and led to a nearly 25% reduction in loads that vessels can carry from Rosario, traders and exporters were compelled to complete their cargoes in other Argentinian ports, mainly in the southern provinces, leading to increased logistics costs, BCR said.

Corn shipments from the ports of Buenos Aires, Bahía Blanca and Necochea rose 150,000 mt over the week as of Aug. 2, BCR said. Soybean line up also registered an increase from the prior week and the value was above the levels observed in previous years until the same date.

On July 13, BCR reported that the shallowness of the river could cause almost $315 million in additional costs from March to August for the traders, mainly due to reduced cargoes.

There are also additional costs in industrial activity at Rosario, where most soybean crushing plants are located, due to the slowdown in the pace of shipments, which generates various inconveniences, stockpiling saturation and crushing delays, according to BCR.

Strikes affect grain flows

In addition to the worsening Parana situation, over the past months various labor unions have held several strikes that hindered grain exports from Argentina.

On July 30, a group of independent truckers blocked entry into the Bahia Blanca port of Buenos Aires, demanding better pay.

The action led to a delay for 40 ships waiting to load 1.2 million mt of wheat, corn and soybean meal, according to Gustavo Idígoras, head of the chamber of grain exporters and processors CIARA-CEC.

"Besides losing predictability as an exporter, the Argentine state loses $400 million in foreign currency due to this anarchic situation," Idígoras said in the BCR report.

Although the group lifted blockades on Aug. 4 for 72 hours for negotiations with the government, protests could resume if no final agreement is reached, according to market participants.