Posts

What is Brazil’s Northern Arc?

Brazil’s Northern Arc can be defined as an area that consists of river and ocean ports in the north and northeast regions of Brazil. These ports are primarily located along the Amazon River, Tapajós River, and the Atlantic coast.

A person who doesn’t know Brazilian logistics and ports, having only knowledge of Brazilian geography, would have no difficulty imagining the widespread use of waterway and cabotage transportation. Bearing in mind the profusion of rivers that flow through our territory, specifically in northern Brazil and our extensive coastline.

However, the flow of Brazilian production for a long time was done in a way that is very contrary to the advice of reason and intelligence, using primarily the South and Southeast grain ports.

Meanwhile, due to successive records in our harvests, coupled with rising Chinese demand, has resulted in numerous bottlenecks in the already overloaded South / Southeast grain ports.

Consequence? Higher transportation costs and longer trips to production areas. Therefore, exporters began a search for viable logistics alternatives in other parts of Brazil.

Thus, each year, the flow of grain through ports in the North / Northeast region has been growing substantially.

The ports above the 16° S parallel compose the so-called North Arc, covering the terminals of the North and Northeast. Since 2015, the Arco Norte ports have been the second largest exit point for soybeans and corn.

Obviously there are several obstacles and challenges to overcome. However, expectations are that the Arc North will export to 50% of the soybean from the state of Mato Grosso as early as 2023.

Despite the obstacles, it is clear that grain flow through the North Arc is a path of no return and that the volume increase in the coming years is a fact.

Regarding the challenges of the region to be overcome, it is necessary to highlight that in 2016 a legislative consultant of the Brazilian Congress wrote a dense study regarding the North Arc, raising the region as the best logistics route for Brazilian grains.

The study indicates in a practical and detailed manner all the difficulties and challenges of the region. It also proposes several solutions.

The Legislative Consultant is nothing less than Tarcísio Freitas, the current Minister of Infrastructure, who has been working together to ensure better infrastructure for the Northern Arc.

No-Deal Brexit Vote Boosts Pound Sterling

Pound sterling exchange rates remain under pressure with Brexit uncertainty continuing to loom large. However, against the United States Dollar, Sterling found something of a reprieve yesterday after disappointing house building statistics were published across the Atlantic.

With Theresa May now in her last week of office, concern over the potential for political chaos under her successor is likely to keep a lid on any upside for the Pound.

The Australian Dollar also performed notably well overnight, gaining ground over Sterling after Australian employment data suggested the Reserve Bank of Australia may have done enough for now in terms of interest rate cuts.

The Pound has continued to climb against the Euro and United States Dollar in Thursday’s trading session. MPs backed an amendment that could prevent Conservative Party frontrunner Boris Johnson from shutting down Parliament to pass a no-deal Brexit in October.

Housing Data Offers Cable Some Temporary Respite

The British Pound to United States Dollar exchange rate found a little respite yesterday following the release of some significantly worse-than-expected United States Building Permits data. Despite falling mortgage rates across the Atlantic, applications to build new houses fell for a second straight month to the lowest level in two years.

Land and labour shortages are said to be behind the move, so this may prove sufficient deflect some concern away from the reading which has previously been seen as an indicator of recession.

However, the news was sufficient to help drag Cable back from its test of two-year lows, at least for now.

Political Uncertainty Keeps Pound Exchange Rate in Check

Markets may have priced in Brexit uncertainty, but it seems as if the impending political chaos starting next week, once a new Conservative Party leader is announced and new Prime Minister appointed, may still need to be priced in. Parliament is, however, strengthening its resolve to ensure it cannot be suspended to allow a no-deal Brexit to be forced through.

The House of Lords voted yesterday to provide further safeguards here and the bill will return to the House of Commons today for a second reading.

The Pound to Euro exchange rate remains close to six-week lows, but anything that points towards another general election being necessary in the Autumn has the scope to see further selling here.

Why Did it Move? Pound to Australian Dollar Exchange Rate

The Pound to Australian Dollar exchange rate fell last night despite a decidedly mixed employment report from Canberra.

However, upward revisions to May’s data and solid growth in terms of full-time jobs appear to have been sufficient to convince markets that the Reserve Bank of Australia doesn’t need to jump in with another rate cut just yet.

Having traded as high as 1.7760 yesterday, the cross now sits almost a cent lower at 1.7670.

Stay tuned for updates!