New York/Sao Paulo/New Delhi - More than 70 ships are lined up at Brazil’s port of Santos to load sugar for export in a queue that may take a month to clear after buyers worldwide scrambled to get ahead of possible disruption caused by the ravages of the coronavirus pandemic.
A large share of the global sugar trade turned to Brazil, which posted record output, and after poor harvests in India and Thailand. The South American nation now has, however, the second-most COVID-19 cases worldwide at more than 610,000.
Three bulk carriers had loading operations suspended in recent weeks and faced a 14-day quarantine in Santos, Latin America’s largest port, after crew members tested positive for COVID-19. A vessel at the nearby Paranagua port had the same problem.
“The situation has been complicated by the virus. Everyone is nervous about what happens if vessels are unable to berth or load quickly,” said Stephen Geldart, head of analysis at food supply chain services company Czarnikow Group Ltd.
In Santos, the flotilla is waiting to take more than 3 million tonnes of sugar to refiners worldwide, compared with just 15 ships to load 700,000 tonnes at this time last year, according to Williams shipping agency. The typical wait time is 29 days, up from four or five days last year.
Two sugar traders told Reuters that buyers were unlikely to cancel contracts, because it would be a high risk for them to find alternative supplies.
“India would be an alternative, but they are having problems as well at ports due to coronavirus,” said Cheng Gonk Vin, head sugar trader at Brazil’s SCA Trading.
Vin said there will be additional costs for traders with ‘demurrage,’ a fee charged by vessel owners when ships stay longer than expected at ports. That charge is seen at around $20,000 per waiting day.