May 21, 2012

US Pacific Northwest grain exports likely up by 60%

In about five years as the region sharply expands capacity, bulk grain exports from the US Pacific Northwest are likely to rise by almost 60% to 30 million tonnes, a senior industry official said Friday (May 18).

"There is hardly any major grains trading company which isn't upgrading infrastructure at their port terminals in [the region] and when complete it will attract a major volume of export traffic," Bruce Abbe, the executive director of the Midwest Shippers Association, said on the sidelines of an international grains conference.

The US is the world's largest exporter of agricultural commodities, shipping more than 115 million tonnes of wheat, corn, soy and soymeal annually. The US coast of the Gulf of Mexico is the largest outlet for US grain exports.

Abbe said the capacity expansion in the Pacific Northwest has been spurred by EGT, a joint venture of Bunge Ltd. and Itochu Corp. which finished building a US$200 million grain terminal in July 2011 in Longview, Washington. The new terminal was the first major new grain export facility in the US in more than 25 years. It became operational in February.

The soy processing cooperative Ag Processing Inc. has recently expanded its storage capacity and ability to handle more agricultural commodities at Grays Harbour, he said. Temco LLC, a joint venture between Cargill Inc. and CHS Inc. (CHSCP) is upgrading export facilities in Tacoma and Kalama, Washington and Portland, Oregon, he said.

In addition, Kalama Export Co. has added storage and upgraded ship-loading facilities while United Grain Co. is preparing to handle commodities in addition to wheat.

Such initiatives will increase grain exports to East Asia because the voyage from the Pacific Northwest takes only three to four weeks, compared with 45 days from many terminals in South America, thereby reducing freight costs, Abbe said.

Rising output of corn and soy in the Northern Plains and Upper Midwest will also lead to greater exports, he said. Last week, the government forecast that US corn output will rise 20% to a record 376 million tonnes in 2012.

Abbe said shipment of grain exports in containers from the Pacific Northwest will also increase because for growers in many areas, particularly in the Upper Midwest, it isn't viable to ship from Long Beach, California, the country's main hub for shipments in containers.

Container-based grain exports remain a small part of the overall trade but are rising due to the increased preference to source from local elevators or a single bean-crushing unit to guarantee quality, Abbe said. Grain from various sources often gets blended in barges when shipped in bulk.