In a report filed Oct. 19 by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS), corn production in Brazil for the 2015-16 marketing year was forecast at 67 million tonnes, down from 85 million tonnes in 2014-15. Production in 2016-17 is forecast to rebound, to 83 million tonnes, behind increased profitability, the FAS noted.
“Because of the tight supplies, high domestic prices are driving an increase in first crop corn, which is expected to be about 38% of the total crop,” the FAS said. “The area is expected to be taken from soybean as corn becomes the more profitable crop.”
The FAS said 2015-16 corn exports in Brazil are estimated at 18 million tonnes, down nearly 50% from last year’s record exports of 34.5 million tonnes.
“Any additional corn that will be exported was commercialized prior to the second “safrinha” harvest and it’s unlikely that there will be any new sales realized until next year,” the report noted. “With the exchange rate stable around R$3.20 to US$1 since July, sellers don’t have the same incentive to export as they did in January and February when the Brazilian currency was much weaker.”
The FAS said exports during the 2016-17 marketing year are expected to rebound to about 23 million tonnes, assuming normal weather and no delay in the planting of the second crop.
On the import front, 2015-16 corn imports are estimated at 2 million tonnes, up 83% from the previous year due to tight domestic supplies. So far this marketing year Brazil has imported 1.04 million tonnes, with about half from Argentina and half from Paraguay, the FAS said.
On Sept 28, the Brazilian Foreign Trade Board (CAMEX) extended for 90 days the 0% exemption of Common External Tariff for corn imports outside of Mercosul up to 1 million tonnes. The previous exemption was set to expire on Nov. 19, and the report noted that the extension is meant to encourage imports of U.S. corn to provide relief to Brazilian pork and poultry producers being squeezed by high domestic corn prices. The regulatory body CTNBio approved three U.S. biotech events on Oct. 6, paving the way to allow U.S. corn imports for feed use only. The United States could potentially export 1 million to 1.5 million tonnes to Brazil.
Corn consumption in Brazil is forecast at 56 million tonnes in 2015-16, down 2% from the previous year. The drop reflects high domestic prices and reductions in the pork and poultry sectors, the FAS said.
“Some contacts have heard of farmers using bread quality wheat as feed, but otherwise Brazil doesn’t have many substitutes for corn that can be switched over quickly,” the report noted.