Bulk grain exports from the U.S. Pacific Northwest are likely to rise by almost 60% to 30 million metric tons in about five years as the region sharply expands capacity, a senior industry official said Friday.

"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 U.S. is the world's largest exporter of agricultural commodities, shipping more than 115 million tons of wheat, corn, soybeans and soymeal annually. The U.S. coast of the Gulf of Mexico is the largest outlet for U.S. grain exports.

Abbe said the capacity expansion in the Pacific Northwest has been spurred by EGT, a joint venture of Bunge Ltd. (BG) and Itochu Corp. (8001.TO), which finished building a $200 million grain terminal in July 2011 in Longview, Washington. The new terminal was the first major new grain export facility in the U.S. in more than 25 years. It became operational in February.

The soybean processing cooperative Ag Processing Inc. has recently expanded its storage capacity and ability to handle more agricultural commodities at Grays Harbor, 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 3-4 weeks, compared with 45 days from many terminals in South America, thereby reducing freight costs, Abbe said.

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

-By Sameer C. Mohindru, +65-9455-2449, sameer.mohindru@dowjones.com

(END) Dow Jones Newswires

May 18, 2012 00:54 ET (04:54 GMT)