Delayed corn harvest feeding up freight cost increase in Brazil

The road freight market for agricultural products in Brazil is expected to remain heated until September, when prices are likely to taper off until the onset of the summer harvest in February 2024. However, the average rates charged by drivers and carriers are anticipated to be higher than those seen in the same period of 2022, as projected by the Group of Research and Extension in Agroindustrial Logistics – ESALQ-LOG.

This situation arises from the delay in the second corn crop (safrinha corn), as only 64% of the area had been harvested by August 3rd, compared to 80% in the same period of the previous harvest. Consequently, the timeframe during which freight prices remain elevated has been extended.

Another contributing factor to the resurgence of higher-than-usual prices is the good pace of corn exports. In 2023, until July, corn exports reached 11.7 million tonnes, whereas, in the corresponding period of 2022, the figure stood at 10.4 million tonnes.

On the route between Ribeirão Preto and Santos, a region rich in sugar shipments, the average price charged by carriers in July was R$ 177.50 per tonne. Forecasts predict that August will see an average of R$ 184.42, with a peak projected for September at R$ 187.74 per ton.

In the case of sugar freight, this year has been characterized by a higher movement, with monthly values registering an average 20% increase compared to the same months of 2022, propelled by international sugar prices and a 50% growth in January, as mentioned by Sarah Barbosa, an EsalqLog researcher.

For transporting fertilizers along the route from Paranaguá, Paraná state, to Rondonópolis, Mato Grosso, peak prices are projected for October, aligning with the customary arrival of shipments in preparation for the summer crop. The forecast anticipates a rate of R$ 270.65 per tonne. In contrast, July saw an average of BRL 224.20 per tonne, marking a 12.3% decrease from the same month in 2022.

Import fertilizer figures up until July indicate a 16% drop, attributed to producers returning to standard purchasing patterns following a period of restrictions due to the conflict in Ukraine. Last year, the onset of the conflict sparked a rush for inputs, maintaining elevated road freight levels throughout the year.

Fernando Bastianim, from Esalq-Log, noted, “While the flow of grains to the ports was active, the return freight did not exhibit the same trend. There were instances of trucks returning empty, which is unusual.”

The researcher further highlighted that the freight values in 2023 have not consistently risen due to decreased transportation costs. “Diesel prices have decreased from an average of R$7.50 per liter in 2022 to R$5.20. This represents a significant reduction since fuel constitutes 40% of the overall transport cost.”

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