December 13, 2008


Brazil 08-09 corn crop hindered by weather


Brazil could see a drop in the size of the 2008-09 corn crop due to recent unfavorable weather, said local corn analysts this week.


Brazil's 2008-09 corn crop is likely drop one million tonnes to 53 million tons due to a recent prolonged drought in southern parts of Brazil, said Steve Cachia, a grains-market analyst at brokerage firm Cerealpar.


Although National Commodities Supply Corp., or Conab, said on December 2 that Brazil should see 7.2-percent less corn at 54.4 million tonnes in 2008-09 compared to 2007-08, private analysts estimate an even smaller crop because Conab didn't consider the recent dry weather.


Corn farmers in parts of Mato Grosso do Sul, Parana and Rio Grande do Sul states have suffered weeks of drought. Although rains returned this week, local corn farmers are complaining of big losses of 30 percent or more.


However, Cachia downplayed the losses by saying it's too early to get an exact measurement as the corn could recover in some areas. Some areas can be less impacted if moisture is retained in the soil from earlier rains, he said.


The weather problems came at a time when many Brazilian corn farmers have been hit by a mix of lower prices, higher costs and tight credit.


Cachia also said Brazil has record corn stocks of around 10 million tonnes, which is helping to moderate prices. "Even one million tonnes of losses won't change corn prices," he said.


Cachia said that at Paranagua port, Brazil's main grain port, corn was sold for 18.5 Brazilian real (US$7.8) per 60-kilogramme bag on Friday, compared with over BRL25 per bag last year.


Paulo Molinari, a grains analyst at consulting firm Safras & Mercado, estimated Brazil should produce around 52.2 million tonnes of corn compared to 55 million tonnes in 2007-08.


Molinari said many farmers have cut their use of fertilizer due to recent high prices. Although fertiliser prices are now falling, the planting is already underway and it's too late to make new purchases, he said.


Brazil has two corn harvests each year. The first corn is planted from August through December, while the second crop is planted from February through March.


Molinari sees an average cost of production of around BRL18.50 per bag and a fall in the planted area of around 6 percent in 2008-09. The planted area should be 14.4 million hectares in 2008-09, down 2 percent from 2007-08, said Conab.


Corn is Brazil's No. 2 crop in acreage behind soy, the country's leading farm commodity.

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