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February 14, 2017

"Northern Arc" of Ports will Export 23.8% of Brazil's Grain Exports

One of the major developments in Brazil's infrastructure in recent years has been the rapid increase in the amount of grain being exported out of what is called the "Northern Arc" of ports. These are ports on the Amazon River and along the northeastern Atlantic Coast that have been modernized and expanded in recent years.

The growing importance of these ports was highlighted in a recent study released by Conab titled "Export Estimates for Soybean Complex and Corn from Brazil's National Ports: 2016/17 Harvest." According to the study, 75% of Brazil's 2016/17 soybean and corn exports will leave the country via the major ports in southeastern and southern Brazil with 23.8% leaving via the Northern Arc of ports. This is the most ever for these northern ports and they are expected to continue to take market share away from the traditional southern ports. It is estimated that moving grain out of these northern ports will save approximately 40% on transportation costs.

The traditional southern ports in Brazil are investing heavily on improving their efficiency and reducing their costs in an effort to maintain as much market share as possible. Both the ports of Paranagua and Santos recently announced major improvement projects geared to improving their efficiency.

Santos is still Brazil's number one grain exporting facility expecting to export 10.8 million tons of soybeans and 10.4 million tons of corn from the 2016/17 Brazilian crop. The capacity at the Port of Santos is currently maxed-out with an increase of only 400,000 tons of soybeans expected for 2016/17. The Port of Paranagua is currently in second place with 13 million tons of soybean exports, but they too are near their maximum capacity.

With the ports in southern Brazil working near their capacity, increased capacity is now migrating to the northern ports. The biggest increase in exports this year is expected at the Port of Itaqui, which is a deep water ocean port in the state of Maranhao. The previous best year at the port was in 2015 when the port exported 7.2 million tons of soybeans and corn combined. In 2017, the port is expected to export 6.6 million tons of soybeans alone. Eventually, the Port of Itaqui is expected to rival the Port of Paranagua as Brazil's second leading grain export facility. The Port of Itaqui is responsible for 37% of the grain exported from northern Brazil.

There are five major grain ports and numerous barging operations on the Amazon River and all five of these ports are being upgraded and expanded. Eventually, it is expected that a majority of the soybeans and corn produced in north-central Brazil will move north to the Amazon River instead of south to the ports in southern Brazil.