Mar 18, 2015

New Export Grain Terminal open for Business in Northern Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The "Northern Arc" of ports in Brazil took a giant step forward last Friday when the first ship loaded with soybeans set sail from the Tegram Grain Terminal at the Port of Itaqui in the city of Sao Luis, Maranhao. This is the latest and biggest instalment in the "Northern Arc" of ports on the Amazon River and along Brazil's northern Atlantic Coast. This new deep water ocean port is just south of the mouth of the Amazon River and it destined to be the largest grain port in northern Brazil.

The first phase at this new terminal costs R$ 600 million to build and will be used by four companies including: Central Harvest States, Nova Agra, Glencore, and CGG Trading. Initially there will be four warehouses each containing 125,000 ton capacity which is sufficient to load a Panamex vessel. The grain terminal is still in the testing mode and is operating at reduced speeds and it is expected to be fully operational by June.

In 2015, the Tegram Grain Terminal (which is short for the Grain Terminal of Maranhao in Portuguese) is expected to export 1-2 million tons of grain and within four years it is expected to be 5 million tons with the addition of a second berth dedicated to grain loading. The soybeans and corn that will be exported from this port are produced in the states of Bahia, Piaui, Maranhao, Tocantins, and Mato Grosso. The North-South Railroad, which already transports iron ore to the port for export, will supply 80% of the grain to the port with 20% arriving by truck. Phase two of the project is expected to increase the grain export capacity to 10 million tons per year.

The port has several major advantages including being seven days closer to European customers compared to the Ports of Santos and Paranagua in southeastern Brazil. This is a deep water port that will be able to accommodate larger vessels when the Panama Cannel is expanded. Additionally, there is an operational railroad already servicing the port which should result in reduced transportation costs.

Undoubtedly, this port will encourage additional soybean production in northeastern Brazil as well as eastern Mato Grosso. The farmers in eastern Mato Grosso will probably benefit the most from the reduced transportation costs because they now have some of the highest transport costs in Brazil.