Jan 21, 2021

Brazilian President Confirms Bidding for Ferrograo Railroad in 2021

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

The Brazilian President, Jair Bolsonaro, announced on social media the government's intension to move forward with bidding on the construction of the Ferrograo Railroad (Grain Railroad), which will connect the city of Sinop in northern Mato Grosso and the Port of Miritituba on the Topajos River, which is a southern tributary to the Amazon River. The president indicated that the bidding would be conducted in 2021.

The Brazilian Minister of Infrastructure indicated that the railroad will extend 933 kilometers (580 miles) at an estimated cost of R$ 21.5 billion ($4.13 billion at the exchange rate of 5.2 Brazilian reals per U.S. dollar). It is estimated that it would take 5-7 years to build the railroad once the winning bids are accepted.

Currently, 70% of the grain exported from Mato Grosso is via ports in southeastern Brazil, primarily the Port of Santos in the state of Sao Paulo and the Port of Paranagua in the state of Parana, both of which average about 2,000 kilometers from central Mato Grosso (1,250 miles).

The Ferrograo Railroad would greatly increase the amount of grain exported out of the "Northern Arc" of ports located along the Amazon River. At the Port of Miritituba, the grain will be barged down the Amazon River to various export facilities along the river.

The railroad will parallel Highway BR-163 which is currently the major route north out of Mato Grosso. Even though the highway is more than four decades old, the final paving of the roadway was just completed a year ago. When the railroad is completed, the cost of transporting grain out of Mato Grosso is expected to decline as much as 40% making Brazilian grain even more competitive in the international market.

Mato Grosso is Brazil's largest producer of soybeans, corn, cotton, and cattle.