Archer Daniels Midland Company : ADM : New Brazil Port Is 'Faster, More Cost-Effective' Export Corridor
07/31/2012| 06:14pm US/Eastern
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By Paul Kiernan and Ian Berry
Archer Daniels Midland Co. (ADM) expects a new port terminal it has agreed to purchase in Brazil's northern Para state to streamline exports of grains from the country's central breadbasket, a company executive said Tuesday.
The company didn't disclose terms of the deal, which is pending regulatory approval. Chief Operating Officer Juan Luciano said the terminal previously exported minerals but will be converted to handle bulk grains and fertilizers.
Brazil, the world's No. 2 soybean exporter and No. 3 corn exporter, currently ships almost all of its grains through southern ports such as Santos and Paranagua. Producers and exporters often complain of bottlenecks and high costs, as the ports routinely become overburdened during Brazil's massive sugar harvest around mid-year.
"The new port will enable us to export products through the north corridor of Brazil, making it faster and more cost effective to move crops from origination points in the middle of the country," said Valmor Schaffer, ADM's president for South America, in an emailed statement. "As the transportation network in the north continues to develop, we believe having a port in the northern region of the country will help us continue to grow our business."
Experts said infrastructure improvements will prove crucial as Brazil seeks to continue steadily expanding its output of major agricultural commodities such as soybeans, sugar and coffee. Effectively linking its top grains-producing state, Mato Grosso, by road or rail to northern ports on the Atlantic Ocean or on rivers in the Amazon basin has been a long-sought goal.
Early forecasts point to the South American country harvesting a record soybean crop of 80 million metric tons next year, possibly surpassing the U.S. as the world's top producer of the oilseed.
Archer Daniels declined to say when it expects the new grains terminal to begin operations. In a news release, the commodities powerhouse said it plans to double the port terminal's storage capacity and equip it to handle Panamax vessels. The terminal will have capacity to handle three million tonnes of goods per year.
Write to Ian Berry at ian.berry@dowjones.com and Paul Kiernan at paul.kiernan@dowjones.com.
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