Indian port congestion hits global commodities trade

Reuters: Congestion at Indian ports is delaying corn and rice shipments to Asia and Africa, dealing a fresh blow to buyers stung by record-high global grain prices as a worsening US drought threatens to spark a shortage in food supply.

Ships faced up to 25 days of waiting at ports on India’s east coast, traders and port officials said on Friday, delaying cargoes to millers who are heavily relying on cheaper South Asian shipments amid tight US and South American supplies.

“There is a lot of congestion at Vizag and Kakinada ports, some shipments are facing delays of around 20 to 25 days,” said one Singapore trader. “It can be a problem for buyers who are short in supply.”

US front-month wheat futures have surged more than 11 per cent so far this week, rising for a fifth consecutive week, while corn has gained almost 8 per cent. Corn prices hit a record high on Thursday as the drought in the U.S farm belt, the worst in 56 years, continued to dent crop yields in the top exporter of the grain.

While lack of berths was leading to delays at the Vizag port, insufficient barges was holding up operations at the Kakinada port which had 22 vessels at anchor on Friday, waiting to load corn and rice.

“Loading is very slow at Kakinada and the monsoon season will only worsen the problems,” said another Singapore trader.

Indian exporters are actively selling corn to Indonesia, Malaysia and Vietnam. Corn exports from India could hit a record 3.5 million tons in the 2011/12 marketing year to September, spurred by higher global prices and a bumper harvest.

Indian corn is quoted at $310 per ton, on a cost and freight basis, into Southeast Asia while Argentine corn is quoted at $340 per ton.

African buyers are snapping up rice cargoes from India which has sold some 5 million tons since export curbs on common varieties of rice were eased in September.

Indian port congestion, which started this month, could ease next month, however.

“I think there will be less congestion after a month as corn exports are declining due to lower domestic supplies,” said Sanjeev Garg, chief executive at agricultural products trading company CommCorp International in New Delhi. More than half the United States was experiencing moderate drought or worse this week, according to the latest US Drought Monitor report issued on Thursday. More than 70 per cent of the Midwest Corn Belt was in some stage of drought in the week ended July 17, up from 63 per cent a week earlier.