MINNEAPOLIS, Minn. — Brazil’s investments in grain transportation infrastructure are beginning to pay off.
The country has long had the ability to produce huge corn and soybean crops, but it struggled to get those crops to overseas markets in a timely manner.
Poor road and rail infrastructure and over-crowded ports slowed the pace of it exports.
But that is changing, said Marcos Rubin, head of grains with Agroconsult, a Brazilian agribusiness consultancy.
Traditional ports in southern Brazil exported 42.4 million tonnes of soybeans and corn from January to August, up from 25 million tonnes in the earlier part of the decade.
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However, the real transformation has been in the north, where growers have shipped 12.3 million tonnes of crops from January to August, up from 8.6 million tonnes for the same period last year.
That is due to three new projects in northern Brazil:
- A river port opened last year in Miritituba in the state of Para.
- Barges from that port transport corn and soybeans from Mato Grosso and other states to the new Panamax port of Vila do Conde, also in Para.
- A little further south is the port of Itaqui, which recently doubled its capacity.
The new investment in inland and coastal ports means Brazil is expected to ship a record 78.3 million tonnes of corn and soybeans this year, shattering the previous record of 69.4 million in 2013.
It is also making it cheaper for farmers to get their crops to market.
Soybeans from central Mato Grasso can break even at a $7 per bushel price in China using the new routes.
Brazil is now the lowest cost shipper of soybeans, largely because of the country’s faltering currency, which has depreciated 87 percent against the U.S. dollar since July 2014.
The landed cost for Iowa soybeans in China is $8 per bushel. Argentina’s is $8.70, largely because of the government’s punitive 35 percent export tax.
“We used to be the highest break-even in the market. We’re not anymore. Not with this exchange rate,” said Rubin.
Brazil’s landed cost using the new routes is $8.40 per bu. when land rent is included in the calculation, compared to $13.50 for the United States and $11.30 for Argentina.
It is why Rubin believes the first reductions in soybean acres because of low prices will be made in the U.S. rather than South America.
“You’re going to be smaller in the market. The United States is going to lose share,” Rubin told the recent Oilseed & Grain Trade Summit.
It is the same scenario for corn, where the break-even for a farmer in Mato Grosso is $3.05 per bu. compared to $4.23 for an Iowa corn farmer. It is even less for a grower in southern Brazil, who has a break-even price of $1.78.
Rubin said the completed port projects in northern Brazil are just the tip of the iceberg. He knows of projects on the books that will double the capacity of the country’s northern ports.
There will also be continued improvements and investment in the country’s southern ports.
sean.pratt@producer.com
