March 5, 2012

In order to offset the effects of a drought that has dented the summer crop in southern states, Brazil's government said Friday (Mar 2) it plans to sell up to 700,000 tonnes of public corn stocks in the domestic market.

"The measures are a way for the government to supply the market's shortage of the product and help the sector, which faces difficulty due to the smaller crop caused by weather factors," the Agriculture Ministry said in a press release.

Authorities plan to sell up to 500,000 tonnes of the grain via auctions in the southern states of Rio Grande do Sul and Santa Catarina, which have suffered most from the ongoing drought, as well as Rio de Janeiro, Espirito Santo and Minas Gerais states. The auctions are targeted at buyers of animal feed for Brazil's poultry, hog, beef and dairy industries.

The government plans to sell the remaining 200,000 tonnes of corn directly in Rio Grande do Sul and Santa Catarina, at a fixed price of BRL21 (US$12.11) per 60-kilogramme sack. Again, the intended buyers will be poultry, hog and cattle raisers, as well as agricultural cooperatives.

Brazil is the world's No. three corn producer. The South American country's summer crop, which is currently underway, has been limited by scant rainfall since November. Analysts say the winter crop, harvested later in the year, should come in relatively strong thanks to an expected increase in planted acreage.