Apr 19, 2010
Ample Corn Supplies Good News For Livestock Producers
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Low corn prices may be bad news for Brazilian corn producers, but its good news for swine and poultry producers in southern Brazil. The increased supply of corn in the state of Rio Grande do Sul should lower cost for swine and poultry producers helping them recover from a losing year in 2009. Domestic corn consumption in the state is approximately 5.3 to 5.5 million tons per year and this year the state is expected to produce 5.3 million tons of corn. A significant drought in the state in 2009 reduced corn production to only 4.2 million tons. The short corn supply resulted in higher feed costs for producers in 2009.
After a very good growing season, Brazil now has an oversupply of corn especially in the center-west region of the country. Corn prices in Mato Grosso and Goias are significantly below the minimum price of corn set by the government. Unfortunately, transporting the corn from central Brazil to southern Brazil is very expensive, but the federal government is expected to pick up some or all of the transportation costs.
Rio Grande do Sul is the largest pork exporting state in Brazil responsible for 236,000 tons of pork exports in 2009 valued at US$ 496 million. Low pork prices and high costs for feed resulted in significant losses for the pork industry in 2009. During the first trimester of 2010, pork prices have increased 15.5% and have averaged US$ 2,341.00 per ton. With lower feed costs and higher pork prices, the industry is expecting to recuperate in 2010.
According to the president of the Rio Grande do Sul Poultry Association, the situation for poultry is very similar to that of pork producers. High feed costs in 2009 led to losses in the poultry industry, but lower corn prices in 2010 should help the industry to return to profitability in 2010.
Livestock producers in the state are concerned though that if corn prices remain too low through the second half of 2010, farmers in the state will opt once again to reduce their 2010-11 full-season corn acreage in favor of increased soybean production, thus not producing enough corn to meet domestic demand in the state in 2010. Corn planting usually starts in Rio Grande do Sul during the month of August if there is ample soil moisture.