April 5, 2004

Brazil Sees Winter Corn Crop Shrink Amid Drought

Planting delays and scorching dry weather are attacking Brazil's winter corn crop potential and could limit exports over the next year.
 
Some analysts expect Brazil to export over 6 million metric tons of corn in 2004, but the bad conditions have caused prices to rise above international levels.
 
Parana, the top corn-producing state, and neighboring Mato Grosso do Sul have only received sparse rains since February. As a result, many farmers chose not to risk planting winter corn or were forced to replant.
 
"The conditions have made it impossible for local farmers to plant as planned and many will now plant other crops such as sorghum or wheat," said Flavio Turra, analyst at the Parana Cooperatives Organization, or Ocepar.
 
The Parana state agricultural department recently lowered its midcrop corn area forecast to 1.18 million hectares, down 13.7% from 1.369 million last year.
 
Meanwhile, those who did plant are desperate for it to rain. A short spurt of rain over the March 11-14 of 60 to 70 millimeters allowed early planted crops to germinate, but they are now in desperate need of rain.
 
"If it doesn't rain soon in Parana and Mato Grosso do Sul soon, we will see losses mount quickly," said Deives Faria, grains analyst for FNP Consultoria.
 
Fortunately, rainfall will fall across the southern grain belt over the weekend and next week, according to the local Somar Meteorologia weather service. But weather is naturally dry in the region over the winter, it added.
 
Midcrop planting problems were also encountered in the center-west state of Mato Grosso, where wet weather delayed soybean harvesting and made planting difficult.
 
Amid similar drought conditions in 2002, the Brazilian midcrop slipped to 6 million tons from original forecasts of 8 million to 9 million tons.
 
According to Leonardo Sologuren, analyst at the Celeres agricultural consultancy, Brazil can still produce 9.1 million tons of corn from the midcrop, down from 12.75 million tons last year.
 
Brazil is a major corn producer, forecast to turn out 41 million to 44 million tons in 2003-04 (September-August), down from a record 47 million tons last year.
 
The negative outlook has caused local prices to rise sharply even while the much larger summer crop arrives on the market.
 
Corn has risen 20% to 30% over the past month in the interior of Parana, reaching 20 Brazilian reals ($1=BRL2.89) per 60 kilogram bag this week.
 
At this level, selling corn on the internal market becomes more attractive than exporting, limiting shipments.
 
Farmers have been rushing to ship corn abroad in the first quarter of 2004 when exports totaled a record 1.942 million tons in the period, up from 374,800 tons last year and 1.1 million tons in 2002.
 
Sologuren forecasts exports will reach 6.8 million tons this year, but that idea could be cut once with more losses.
 
Other forecasters say foreign sales were unlikely to rise above the 3.6 million tons sent abroad last year.
 
The recent price hikes have also hit the high-flying chicken and pork sectors.