Brazil '08 corn exports may fall 50 percent

Brazil's 2008 corn shipments are seen to drop by more than 50 percent due to stiff competition in the international markets.

 

Corn exports are expected to fall to 5.5 million tonnes, compared to nearly 11 million tonnes last year.

 

High costs, low productivity and a strong local currency for most of 2008 led to a reduction in corn shipments and with production totalling a record 58.5 million tonnes, this has led to high stocks and weakening local prices.

 

The country's corn stocks are currently around 14 million tonnes according to government's grains research agency Conab but local demand has fallen as local meat producers cut back on production due to a slow down in local and world markets.

 

However, it is not all bad news for local corn farmers as analysts say price outlook for 2009 may improve.

 

Drought has hit corn output in the south of the country over the past two months, and production could be down by at least 20 percent. Indeed a smaller planted area as well as drought damage could leave Brazil's summer corn production at around 35 million tonnes, down from nearly 40 million tonnes last year.

 

Brazil's winter corn production, planted in February and March, could also be much lower due to higher costs and low prices on the local market, currently as low as US$2.10 a bushel in parts of Mato Grosso.

 

Farmers are seen to plant around 30 percent less winter corn area, which could decrease production to around 14 million tonnes. This would put Brazil's total 2008-09 corn production at under 50 million tonnes, or 15 percent lower than this season.

 

The currency has also weakened, trading around R$2.38 to the dollar, or nearly 40 percent weaker than a few months ago which will make Brazilian corn more competitive on the international market and lead to higher exports next year.

 

So with lower production and higher exports next year farmers could end up with a better price for their corn, provided local demand holds firm.