By United Soybean Board
Congestion at Brazilian ports, U.S. port labor disputes and market access issues impact U.S. soybean farmers
The U.S. transportation system makes it possible to move soybeans from areas of surplus to areas of deficit, ensuring both domestic and international customers receive a steady supply of U.S. soybeans. U.S. soybean farmers depend on the country’s transportation system to be profitable, but third parties involved can either encourage or inhibit the movement of agricultural commodities.
The checkoff continues to monitor a variety of issues that could impact your bottom line, including congestion at Brazilian ports, U.S. port labor disputes and market issues in soy-importing countries.
Congestion at Brazilian Ports Worsens
U.S. soy sales may soon pick up at Brazil’s expense. According to Reuters, a perfect storm of wet weather and congestion at Brazilian grain terminals is causing serious delays for Brazilian soy exports. Although Brazil’s soybean prices are attractive to buyers in China and other international markets, these delays could cause Brazil to lose business to the U.S.
International soy buyers often say that predictability of delivery is just as important to them as price. In fact, some international buyers prefer U.S. soy because they can count on it reaching them in a timely manner, according to a soy-checkoff-funded study.
Soy buyers pay attention to the timeliness of a shipment delivery in addition to price. Late shipments can be expensive for buyers, as they incur costs in trying to find replacement crop, slowing down crush facilities and other problems that arise when shipments don’t arrive in the time frame that was promised.
U.S. Port Labor Disputes
Labor issues that cause disruption at U.S. West Coast ports are an area of concern for the U.S. soy industry. Last year, contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association stalled and eventually required government intervention to move forward.
According to the Journal of Commerce (JOC), the risk of disruption is greatest as negotiators get closer to the end of the current contract. The ILWU is bound by a clause in its current contract barring strikes during the life of the contract, but slowdowns are harder to prevent, the JOC says.
Slowdowns and strikes affect the exports of U.S. soy to international customers, which hurts U.S. soy’s competitive advantage of reliability.
After experiencing issues that heated up in late 2013 through 2014, companies like United Grain Corporation are now back to business as usual. The current agreement between the ILWU and grain groups is now in effect until May 31, 2018.
The Agricultural Reauthorizations Act of 2015 included provisions that will help prevent future disruptions at the ports by reauthorizing the Mandatory Price Reporting Act, the U.S. Grain Standards Act and the National Forest Foundation Act. This act was signed into law by President Obama on Sept. 30, 2015. After a period of volatility, business at the ports is coming into balance.
Market Issues in Soy-Importing Countries
Transportation is part of a larger issue: international market access. The U.S. Soybean Export Council (USSEC) reports several market access issues that could affect U.S. farmers’ ability to get soybeans to their international customers.
- The Philippines Bureau of Customs (BOC) could be reconsidering a regulation governing inspecting shipments to ensure they contain the reported cargo. This regulation is called the Load Port Survey (LPS) program, and the expansion of this legislation could affect container shipments of U.S. soy.
- In China, there are delays in off-loading vessels and longer term warehousing until tests for GM material are concluded. China quarantine officials continue to report finding seed-treated soybeans in shipments, but have not stopped trade due to this presence thus far.
- Taiwan legislature approved a GMO food labeling law in January 2014, and the Taiwan FDA is currently drafting implementation regulations for the new law. This impacts all soy products except soybean oil. This issue could diminish demand for bulk soybeans delivered in containers from the U.S.
- In Japan, the U.S. soy industry has experienced trade disruptions due to detections of chemical residues that exceed the country’s tolerances. As U.S. soybean farmers use new herbicide mixes to address glyphosate-tolerant weeds, there is a need to monitor those chemicals and the maximum residue level policies in export markets.
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