Plans by commodities trading rivals Archer Daniels Midland Co and Glencore PLC to jointly develop an export terminal in northern Brazil promise to shift grain flows both within South America's largest producer and to Asian importers, Yahoo! Finance reports.
ADM will give
Glencore 50 percent in its Barcarena export terminal in Brazil's Para state, it
said on Tuesday, the Swiss-based company's first foray into Brazilian grain
ports.
The companies
plan to quadruple the facility's annual capacity to 6 million tonnes, making it
one of the country's largest grain export terminals.
Terms of the deal
and the timeline for expansion were not disclosed.
The two grains
heavyweights hope to tap rising crop production in northern Brazil, eyeing the
upcoming expansion of the Panama Canal for a more direct route to Asia,
industry analysts said. Northern ports are also easier and cheaper for exports
from northern Mato Grosso, Brazil's top soybean state.
Brazil currently
exports the majority of its crops through southern ports such as Santos and
Paranagua, which have become congested as a result. Investments in better roads
in recent years have opened a path to northern ports.
"The global
players are all lining up to participate in what is expected to be a
boom," said Pedro Dejneka, managing partner with AGR Brasil, a unit of
consultancy AgResource Co.
"The pie is
plenty large for everyone to participate but these northern ports need to exist
if Brazil wants to expand production in the next decade" and be
competitive globally, he added.
Accessing
Barcarena from Brazil's center-west grain belt requires trucking over the
BR-163 highway to river ports in the Amazon, where grains are sent by barge to
ports for loading into bulk grain ships.
Rival grain
trader Bunge Ltd started shipping out of Barcarena last year. Cargill Inc has
moved only a small amount of grain on barges deep in the Amazon to northern
ports over the past decade.
Glencore's South
American grain port facilities include a wholly-owned terminal in Bahia Blanca
and a joint venture in Timbues, both in Argentina. Its Brazilian assets include
wheat and sugar mills and a soy processing plant but no port facilities.
Brazil's ports
minister said last year grains shipments through northern ports could rise from
3 to 4 million tonnes to 15 million tonnes by 2020. Brazil's total corn and
soybean exports are projected to top 65 million tonnes this season.
Read the article HERE.
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