Jan 30, 2014
Northern Export Routes being developed for Brazilian Soybeans
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Soybean producers in central Brazil have long argued that the high cost of transporting their grain to ports in southern Brazil reduces their competiveness in the world market. They have been promoting projects that would allow soybeans to flow north to ports on the Amazon River as a way to reduce transportation costs. Ever so slowly alternative routes northward are being developed in Brazil and several million tons of soybeans from the 2013/14 harvest are expected to be exported out of ports on the Amazon River.
The principal route north will be along highway BR-163 which connects the state of Mato Grosso and the port city of Santarem on the Amazon River. This highway was carved out of the Amazon rainforest years ago, but for decades it remained unasphalted and impassable during the rainy season. The highway is currently being asphalted all the way to the city of Santarem located on the Amazon River and the entire project is expected to be completed sometime in 2014.
Once the highway is completed, it is expected to reduce transportation costs from northern Mato Grosso by at least 35% compared to shipping soybeans to ports in southern Brazil. The distance from Sorriso in central Mato Grosso to the Port of Santos in southern Brazil is 1,950 kilometers and to the Port of Paranagua it is 2,100 kilometers. As a comparison, it is 1,400 kilometers from Sorriso to the Port of Santarem.
An even greater cost savings will be achieved by transporting the soybeans along BR-163 to barging operations currently being constructed on the Tapajos River at the city of Italtuba in the state of Para. From there the soybeans will be barged to the Port of Santarem or other ports near the city of Belem at the mouth of the Amazon River. The distance from Sorriso to the start of the barging operation is approximately 1,100 kilometers.
Shipping soybeans out the Amazon River also reduces the time and the distance needed to get the soybeans to China, which is the destination for 75% of Brazil's soybean exports. Ships leaving the Amazon River going to China via the Panama Canal would save four days on the high seas as compared to ports in southern Brazil. It would also avoid many days of delays associated with loading vessels out of the southern ports.
During the 2012/13 growing season, the average cost of transporting soybeans south to the ports of Santos and Paranagua was US$ 133 per ton, but if the soybeans were exported out of the Amazon River ports, the cost would be reduced to US$ 88 per ton. Sending the soybeans north instead of south would save approximately US$ 1.20 per bushel in transportation costs. Once expansion of the Panama Canal is complete, savings will be amplified another 20% when the canal will be able to accommodate even larger vessels of up to 150,000 tons.
By the year 2022 it is estimated that 60% of Mato Grosso's soybeans will be exported out of northern ports and only 40% will head south to southern ports.