March 2, 2007

 

Brazil seen gaining world corn market share
 

 

Brazil's corn exports are expected to surge to 6.5 million tonnes in the 2006/07 crop year, up over 62 percent from 4 million tonnes the previous crop, Brazil's crop supply agency Conab said.

 

Corn specialist Marco Antonio de Carvalho at Conab said that US' development of renewable fuels, particularly ethanol from corn, was the main force behind a recovery in world prices and expansion in Brazil's planted area.

 

Carvalho said Brazil has only been an intermittent exporter of corn in past years.

 

In his State of the Union address in January, US President George W. Bush floated a plan to raise US biofuels production five times from current levels by 2017 to help cut reliance on crude imports from politically volatile countries.

 

The feedstock for nearly all of US ethanol production is corn, of which the United States is by far the world's largest grower and exporter. The estimated corn needed to meet US renewable fuel usage goals has fired corn futures prices.

 

The Chicago Board of Trade March corn futures are trading near contract highs.

 

Brazil plants two corn crops: a main summer crop in September-November and a smaller winter crop around this time of year. The summer planted area of 9.5 million hectares was down 2 percent from the year before due to the crisis in the grains sector over the past two years.

 

But winter planting is forecast by the government to rise 12 percent to 3.7 million hectares, largely due to the recent rise in international grains prices.

 

Mato Grosso's winter crop will grow by 18 percent this season and will overtake Parana as the leading corn state for the winter crop, said specialist Maria Melia at AgRural analysts in Mato Grosso.

 

Mato Grosso overtook Parana as Brazil's No.1 soy producing state over six years ago. Nearly all the arable land in states like Parana and Rio Grande do Sul in the south, the original home of grain production in Brazil, have been cultivated.

 

But Brazil's centre-west has vast areas of degraded pasture and open savanna that can be converted relatively quickly into productive land with some soil conditioning.

 

The region still has logistical drawbacks due to its long distance from ports but there is ample poultry, pork and cattle ranching in the region that would provide demand for corn, freeing up the large southern producer states like Parana and Rio Grande do Sul to export, analyst said.

 

But with the extra corn and a bumper soybean crop fighting for Brazil's already tight export capacity, exporters are likely to suffer some delays at the main southern ports in the coming months, as was the case in 2004, analysts said.