July 25, 2009


Brazilian corn exports seen stung by forex pricing in 2H '09


Unfavourable foreign exchange conditions are expected to stifle Brazilian corn exports in the second half of this year, according to grain industry contacts.


Corn exports were up in the first half of the year, but they will probably finish the year around the same level as last year, said Flavia Sologuren, a consultant at agricultural consultancy Celeres.


Brazil exported around 7.7 million tonnes of corn in 2008.


Much of the slack comes from the Brazilian real strengthening against the dollar, said agriculture specialists. One US dollar on Friday was worth 1.89 Brazilian reals, down almost 20 percent since the beginning of the year.


Reinaldo Sarmento, an analyst at consultancy Safra & Mercado, said Brazilian corn exports may fall below seven million tonnes for 2009, due to a sharp decline expected in the second half of the year.


According to Sarmento, Brazilian corn exports totalled 3.39 million tonnes in the first half of 2009 versus 3.31 million tonnes for the same period of 2008.


Exports are slowing because corn prices don't make it attractive to export, Sologuren said. As a result, producers can sell locally at more attractive prices, he added.


Brazilian corn prices stood at BRL20.19 (US$10.69) per 60-kilogramme bag Thursday (Jul 23), according to Center for Advanced Applied Economic Studies.


Sarmento said Brazilian and international corn prices are generally much lower than historical levels as a result of the favorable climate and a large US harvest. Even so, Brazilian prices remain about US$10 above the international price, he said.


Corn traders in Europe are saying that until Brazilian corn prices fall by US$15 or US$20, they will purchase elsewhere, he said.


Steve Cachia, a grains analyst at consultancy Cerealpar, said Brazil needs to ship some eight million tonnes of corn this year to remove the excess stock that accumulated last year.


These stocks are keeping a lid on prices and making corn unattractive for farmers to produce, Cachia said.


As a result, many farmers are expected to plant more soy instead of corn for the upcoming 2009-10 harvest, Cachia said.