Earlier this week, ADM announced it had struck a deal with Glencore whereby the Anglo Swiss multinational commodity trading and mining company will take a 50% stake in its export terminal in Barcarena, which only started operations last year.
A spokesperson for ADM told FeedNavigator today: “When the expansion process is complete, ADM’s share of the terminal’s capacity will be 3 million tons, which will allow the company to continue to serve the expanding agricultural sector in northern and western Brazil, along with Europe, Asia and other global markets.”
In addition to its increased capacity, ADM said the upgraded terminal, which mainly handles soy, will be able to handle larger Panamax vessels, allowing the joint venture partners to connect global markets more efficiently and divert some of the grain from the crowded southern ports.
The combination of huge demand from China for GM soy and other crops from Brazil in the past few years and the ports infrastructure not keeping pace has resulted in restricted access to the major bulk terminals of Santos and Paranaguá, with subsequent hold-ups in ship berthing and loading along with soy supply disruptions to European markets.
Northern Brazil production
Valmor Schaffer, president of ADM South America, said: “Agricultural production is expanding rapidly in northern and western Brazil, and the Barcarena terminal is very well positioned to capitalize on that growth.”
And, while discussing Brazilian soy production at ADM’s Investor Day back in December, he said:
“The state of Mato Grosso, in the center west of the country, is the largest grains producer in Brazil, and is estimated to grow at around 4% or maybe 5% per year within the next four years.
But there are other four states in the north of Brazil - Maranhao Tocantins, Piaui and Pará - which are estimated to grow at a much higher growth rate in the same period, approaching 20%.”
Schaffer also said ADM is also going to increase storage capacity to feed the Barcarena port and it is planning to invest in inland river terminals.
He told investors: “Considering the distance today from some parts in the north of Mato Grosso to the Eastern ports, the freight can reach something around $3 per bushel, which is from 25 to 30% of the price of the beans. And that's why we are capitalizing on the production trend in the northern part of Brazil.”
However, he stressed that ADM is still “preserving our strong operations” in Mato Grosso.
ADM is also building a soy protein production complex next to the company’s existing soybean processing facility in Campo Grande in Mato Grosso. It already processes soy at four facilities, along with the largest biodiesel plant in Brazil, a cocoa processing plant, a sugar cane processing facility, and more than 40 elevators across the country.
In 1997, the commodities giant bought Glencore’s grain operations in Brazil but the Swiss headquartered group still has considerable holdings in that market from wheat mills, a sugar mill and a soybean crushing plant.
But this venture with ADM represents Glencore’s first move into a soft commodities export terminal in Brazil.