September 7, 2011

  

Brazil's corn shows strong forward sales

 

 

Mato Grosso, Brazil's largest soy-producing state puts corn as the next headline crop as its strong forward sales reflect good price and planting expectations.

 

Producers in Mato Grosso never expected this crop to sell so much. Strong exports, a brisk domestic market and near-record global prices due to a smaller-than-expected US crop have stimulated business in the new crop in Mato Grosso.

 

"A lot of sales have been made. People are already joking about selling corn before soy," said Otavio Celidonio, director of the Mato Grosso farm institute, Imea.

 

The centre-west state usually accounts for more than a quarter of Brazilian soy output and plants corn immediately after soy is harvested. Producers in the state records higher forward sales of soy than anywhere else in Brazil, even before sowing begins every year in September-October.

 

Mato Grosso producers have now received commitments in September anywhere near 30% to finance their planting operations that did not happen for the past years.

 

 

Imea will announce the first forecast for 2011/12 corn sales in two weeks. Celidonio, however, said, "They are close to soy (with 33 % currently sold), approaching one third of total production."

 

High corn prices <Cc1> are driving the elevated sales.

 

Corn is quoted in the town of Sorriso, the biggest producer in Mato Grosso, at US$10.90 per 60-kg bag, double the level registered a year ago, according to Informa Economics FNP consultancy.

 

Mato Grosso has accounted 70 % of all the corn exported by Brazil in 2011, and it is likely the situation in 2012.

 

Brazil exported 4.5 million tonnes from January to August, up from 2.3 million tonnes over the same period a year ago. Brazil exported more than 10 million tonnes in 2010. Corn exports tend to pick up at the end of the year.

 

"Two things are happening: Brazil did not have a great crop as expected (after frosts hit Parana state). And next year, prospects are excellent, due to tight domestic supply and international supply problems. America is in trouble," the president of Brazilian corn producer association Abramilho, Alysson Paulinelli, said.

 

Mato Grosso harvested seven million tonnes in mid-August 2010/11, despite a drought.

 

Imea sees a jump in the state's new corn crop to almost 9 million tonnes, as the planted area is set to increase 15% to 2 million hectares (4.9 million acres).

 

A multinational trader in the Primavera do Leste region, which plants around 500,000 hectares to grains, said forward sales have surpassed 20% of the expected crop, compared with one third of the expected soy crop.

 

Mato Grosso and other states often plant two crops a year: soy is typically planted from September through December; then corn is planted soon after the soy harvest to try to capture the tail end of the rainy season.

 

Some independent consultants are forecasting a new record Brazil corn crop that could hit 60 million tonnes versus more than 56 million tonnes last season.