February 24, 2012

New Grain Port Proposed for Amazon River

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

Brazilian port authorities are studying the possibility of constructing a new grain port near the city of Belem at the mouth of the Amazon River. The new port would have the capacity to move 18 million tons of grain per year making it the largest in Brazil, surpassing the 16.8 million ton capacity at the Port of Santos and the 14.8 million ton capacity at the Port of Paranagua.

A major port on the Amazon would greatly reduce the cost of transporting grain from the new production areas in the states of Mato Grosso, Goias, Para, Tocantins, and Maranhao. The port would also be over three thousand kilometers closer to customers in Europe as well as the Panama Canal compared to the ports in southern Brazil. Currently, the average cost of transporting a ton of soybeans to the various ports of Brazil is US$ 85 per ton compared to US$ 20 per ton in the U.S. and Argentina. The US$ 85 dollar figure is the average across the Brazilian soybean production belt, the transportation cost are much higher for producers in the interior of Brazil such as Mato Grosso.

Getting the soybeans to the Amazon River at a reasonable price is still a work in progress. The cheapest way to move a bulk product such as soybeans is by barge, but there is only one barging system currently operating in Brazil. It is on the Madeira River in the western Amazon region. There are currently no barging operations that could transport soybeans to the new proposed port in Belem, although there are discussions about potential barging operations.

The farmers in Mato Grosso are pushing for a barging operation along the Teles-Pires River which would transport soybeans from northern Mato Grosso to ports on the Amazon River at the city of Santarem, a distance of 1,576 kilometers. If completed, the system could reduce the transportation cost by as much as 40%.