What's on the horizon for South America?: Part 2

The majority of Colombia’s thermal coal exports are shipped out of the Atlantic Basin, but a small amount is also exported out of the Pacific Basin as Colombia straddles both the Atlantic Ocean and Pacific Ocean. The vast majority of Colombia’s thermal coal exports are shipped in capesize vessels, and most cargoes are exported to buyers in Europe. Last year, Colombian thermal coal exports increased to a record of 81 million short t. In 2016, exports are expected to total approximately 88 million short t. This would mark a year-on-year increase of 7 million short t (9%) and would set another record. Colombia has often had environmental and railway problems, however, and logistical concerns remain an issue that is limiting stronger growth in Colombian exports. However, the Colombian government has remained keen on further increasing the country’s thermal coal production and exports; growth is expected to continue during upcoming years.

Grain

South America is also home to a very large amount of grain production. In particular, a significant amount of the world’s soybeans and coarse grain (which includes corn) is harvested in South America, and the grain cargoes are then shipped to various buyers around the world. Overall, the vast majority of South America’s grain shipments are exported from Brazil and Argentina, and these are Atlantic Basin exports. Brazil is the world’s largest soybean exporter; Argentina is the third largest. In addition, Argentina is the world’s second-largest exporter of coarse grain and Brazil is the third largest. In total, Brazil and Argentina export approximately 56% of the world’s soybean exports and also approximately 26% of the world’s coarse grain exports. The vast majority of South American soybean and coarse grain exports are shipped in panamax and handymax vessels (including supramax and ultramax vessels).

Brazil is expected to produce approximately 101 million short t of soybeans during the current 2016/2017 grain trade marketing year. This would mark a year-on-year increase of 4.5 million short t (5%) from the 96.5 million short t of soybeans that Brazil produced in 2015/2016. In addition, Brazilian soybean exports in 2016/2017 are expected to total approximately 58.5 million short t. This would mark a year-on-year increase of 3 million short t (5%) from the 55.5 million short t exported in 2015/2016. Argentina is expected to produce approximately 57 million short t of soybeans during the current 2016/2017 grain trade marketing year. This is roughly the amount that Argentina produced in 2015/2016. In addition, Argentinean soybean exports in 2016/2017 are expected to total approximately 11 million short t. This would mark a year-on-year increase of 1 million short t (10%) from the 10 million short t that Argentina exported in 2015/2016. China remains the world’s largest importer of soybeans and the vast majority of Brazilian and Argentinean soybean exports are sent to Chinese buyers.

Regarding the coarse grain market, Argentina is expected to produce approximately 44 million short t of coarse grain during the current 2016/17 grain trade marketing year. This would mark a year-on-year increase of 7 million short t (19%) from the 37 million short t of coarse grain that Argentina produced in 2015/2016. In addition, Argentinean coarse grain exports in 2016/2017 are expected to total approximately 27 million short t. This would mark a year-on-year increase of 4 million short t (17%) from the 23 million short t that were exported in 2015/2016. Brazil is expected to produce approximately 85.5 million short t of coarse grain during the current 2016/2017 grain trade marketing year. This is 16.5 million short t (24%) more than Brazil produced in 2015/2016. In addition, Brazilian coarse grain exports in 2016/2017 are expected to total approximately 24.5 million short t. This would mark a year-on-year increase of 8.5 million short t (53%) from the 16 million short t that was exported by Brazil in 2015/2016. Northern Africa and the Middle East combined make up the largest buyer of coarse grain imports. A large amount of South American coarse grain exports are shipped to this region, along with various other importers around the world.

Outlook

Overall, South America is a major player in the iron ore, coal and grain markets – with Brazil, Colombia, and Argentina the most significant dry bulk exporting nations. Changes in South American commodity production, logistics, government policy, etc. will all continue to have a very significant impact on the dry bulk shipping market in years to come. As it currently stands, production of all major South American dry bulk commodities is likely to continue to increase in upcoming years, with the largest growth expected to be seen in Brazilian iron ore production. South America is set to remain a resource-rich continent filled with nations that are still very much developing. Dry bulk commodity production and exports are a major source of income, jobs, and tax revenue for Brazil, Colombia and Argentina – and further boosting dry bulk commodity production remains a key focus in all of these nations. Prospects for long-term growth in South American dry bulk commodity exports are very promising, and South America is set to remain the backbone of the dry bulk shipping market.

Read the article online at: https://www.drybulkmagazine.com/special-reports/22022017/whats-on-the-horizon-for-south-america-part-2/