The Port of Santos has a queue of more than 70 vessels waiting to be loaded with sugar for export because buyers around the world are bringing their purchasers forward. This is to ensure against the possibility of supply problems caused by the coronavirus pandemic. The bottleneck may take more than a month to be reduced. Moreover, demand for Brazilian sugar is also being fueled by the fact that it is expected to have record production from the current harvest, whilst countries like India and Thailand have had poor harvests this year. Three large vessels have had their cargo operations suspended in recent weeks and have had to face 14-day quarantines in Santos after crew members tested positive for Covid-19. A vessel in the port of Paranaguá (PR) had the same problem. In Santos, the vessels are waiting to take more than 3 million tons of sugar to refineries around the world. In the same period last year, there were only 15 vessels at this time, waiting to load 700,000 tons. The average waiting time is now around 29 days versus four or five days last year. Operators will still face additional costs with demurrage, a fee charged by shipowners when they need to wait longer than expected at ports. This fee is around US$20,000 per day of waiting, so some market operators have negotiated postponement of shipments with sugar plants. Buyers of sugar futures contracts for May purchased a total of 2.26 million tons to deliver this contract, a monthly record. This sugar needs to be delivered to New York at the end of July, which has increased congestion in Santos. Chinese commodities trading company Cofco International and Wilmar International were responsible for deliveries and will need to pay for the demurrage. DataLiner data show that Brazilian sugar exports grew 23.4% in the first quarter of 2020 compared to the same period in 2019, reaching 3.77 million tons shipped.
Source: Reuters