May 13, 2004

 

 

Brazil's Corn Exports Gain From Paranagua GM Ban And Solid Demand

 

Brazil's corn exports rose sharply during the first four months of the year benefiting from strong international demand and extra space at Brazil's main grains port of Paranagua, according to analysts.

 

"Producers took advantage of solid demand and free space at Paranagua port to export large stocks left over from last year's winter crop," said Robson Mafioletti, corn analyst with the Parana Cooperatives Organization, or Ocepar.

 

Brazil's corn exports totaled 2.63 million metric tons in the first four months of 2004, compared to around 500,000 tons during the same period last year.

 

"Problems at Paranagua meant a lot of soy was diverted to other ports, which opened up space for corn shipments," said Silvio Farnese, general grains coordinator at the Agriculture Ministry.

 

Earlier this year, Paranagua port decided to ban the export of genetically modified soybeans despite a federal decision to free the planting and sale of GMOs this year. This led many exporters to switch business to other ports such as Santos and Rio Grande.

 

This allowed Brazil to export a record amount of corn in March, totaling 923,300 tons, 85% of which was shipped through Paranagua port.

 

Meanwhile, a weaker local currency is also helping boost corn shipments. The Brazilian real was trading at BRL3.14 to the dollar Wednesday, it is weakest level in over a year.

 

"If this keeps up, Brazil will easily surpass expectations for corn exports this year," said Mafioletti.

 

Brazil's National Commodity Supply Corp., or Conab, sees soy exports totaling 5 million tons this year, up from 3.57 million tons last year.

 

"Exports still depend on the size of winter crop and on weather conditions over the coming months," said Mafioletti.

 

Brazil's winter corn crop is seen totaling 9.7 million tons, down from 12.8 million tons last year, due to lower planted area and dry weather, according to Conab estimates.

 

The main destinations for Brazilian corn are Spain, South Korea, Iran and Japan.

 

"We have the quality they are looking for in Europe and the Middle East and the international scenario for corn looks positive," said Mafioletti.

 

According to Farnese, the government will encourage a private options program for corn this year, as opposed to a federal program, due to lack of funds.

 

"Details of the program will be released at the end of the month, but the idea is to encourage consumers to issue options contracts," said Farnese.

 

He added that the government will establish an exercise price and pay a premium in the case where market prices are below this level when options come due.