April 8, 2014
Brazilian Corn Producers are Slow Sellers, Expecting Higher Prices
Brazilian corn producers are in no hurry to sell their corn due to the prospect of higher prices as the result of lower safrinha corn production in Brazil and lower corn acreage in the United States. While the prospect of higher prices may be good for producers, it is not good news for livestock producers in southern Brazil.
Corn producers in Brazil have had several good years of high production and strong prices, but lower corn prices last fall convinced many farmers to switch some of their intended corn acreage to additional soybean production. According to Conab, the 2013/14 full-season corn crop should be 9% smaller than last year and most analysis are expecting the 2014 safrinha corn crop will be smaller as well. The Mato Grosso Institute of Agricultural Economics (Imea) is estimating that the safrinha corn crop in Mato Grosso will decline 24% in 2014 to 15.3 million tons compared to the 22.5 million tons produced in 2013.
The livestock industry is centered in southern Brazil and the prospect of higher corn prices has many producers worried. Domestic corn prices in western Santa Catarina increased 13% during the last 40 days to R$ 24.70 per sack (approximately US$ 5.00 a bushel). In Parana the price of corn has risen 32% since last September closing out the month of March at R$ 23.30 per sack (approximately US$ 4.80 per bushel).
There are adequate supplies of corn in southern Brazil, but livestock producers have been having a hard time securing needed corn supplies at prices that are not unrealistically high. Parana farmers have harvested 75% of their full-season corn crop but have only sold 27% of the crop thus far. In addition, the Secretary of Agriculture in the state estimates that farmers are still holding onto 17% of last year's safrinha crop (1.7 million tons).