Brazil expects its corn output to drop next year amid plummeting corn prices and a slowdown in international demand.
A release by the University of Sao Paulo think tank Cepea says the current price depression and laggard exports can lead to a reduction in planting area in the next crop.
Agricultural"data indicate that the 2014/15 summer season area might be between 1.33% and 7.55% lower than the crop before, resulting in a production between 29.3 tonnes and 31.3 million tonnes, against 31.7 million tonnes in 2013/14."
Corn producers in Brazil are concerned with the current price level and its downward trend, according to Cepea.
The Brazilian government, it claims, has not intervened so farto keep domestic prices from falling further.
Due to oversupply, domestic prices have been falling on a daily basis. On September 15, for instance, a 60-kilogramme bag of corn was selling at US$9.39/bag. In just a week, it has fallen to US$9.23/bag.
The current pace of exports has not been enough to stop the downward price spiral, especially since international prices have also been falling, Cepea says.
The government has been unloading its corn inventory by auctioning them off. But sales have been slow.
In the September 11 auction, only 1.603 million tonnes were traded out of the 1.8 million tonnes available.
Although auctions continue, the daily average of Brazilian exports in the first week of September was 41% smaller than that observed in August, Cepea says.If this pace continues, shipments might not reach 1.5 million tonnes this month, a big drop from the 3.45 million tonnes exported in Sept/13.