Brazil producers' zest for corn to stabilise

Brazilian farmers' enthusiasm for corn, which has seen them keep sowing despite prices are below the cost of production, may be reaching a plateau, with production next season set to fall to a five-year low.

Brazil's farmers have accelerated plantings for this season's winter, or so-called "safrinha", crop, with producers in Mato Grosso state getting more than half in the ground already, compared with 21% by this time last year.

The enthusiasm belies a local price which, at BRL7.00 (US$3.9) per 60 kilogramme bag, is an estimated BRL3.50 (US$1.9) a bag below the cost of growing it.

Producers have relied on delaying purchases of fertilisers and sprays in an effort to improve the prospects of reaping a profit.

"In the Centre-West, for example, input sales that normally would have occurred in September or October were delayed to January and February," the bureau said in a report.

Nonetheless, farmers have limited interest for increasing corn growing areas, with sowings for 2010-11 poised to remain flat at 13.3 million hectares, with soy remaining popular thanks to their smaller fertiliser needs and more developed market structure.

"Producers will continue to opt to plant soy based on their lower input costs and greater liquidity," the report said.

Assuming yields return near to normal levels, Brazil's corn harvest will fall by one million tonnes to 50 million tonnes in 2010-11, the lowest for five years. Production peaked at 2006-07 at 58.6 million tonnes.