Report Highlights:

2015/2016 wheat production is estimated at 5.6 million metric tons (mmt), but consumption is down slightly due to higher prices. 2014/2015 record corn exports, due to a weak Brazilian currency, are pushing domestic corn prices up. 2014/2015 milled rice production is forecast at 8.4 mmt a slight decrease from the previous estimate due to heavy rains and flooding in the largest rice producing state of Rio Grande do Sul.

Wheat

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2200

2200

2730

2730

2450

2450

Beginning Stocks

1001

1001

1887

1887

870

870

Production

5300

5300

6000

6000

5600

5600

MY Imports

7066

7066

5374

5374

6300

6500

TY Imports

7061

7061

5869

5869

6300

6500

TY Imp. from U.S.

4073

4073

1296

1296

0

500

Total Supply

13367

13367

13261

13261

12770

12970

MY Exports

80

80

1691

1691

1300

1500

TY Exports

81

81

1688

1688

1300

1500

Feed and Residual

600

600

300

300

400

600

FSI Consumption

10800

10800

10400

10400

10000

10000

Total Consumption

11400

11400

10700

10700

10400

10600

Ending Stocks

1887

1887

870

870

1070

870

Total Distribution

13367

13367

13261

13261

12770

12970

(1000 HA) ,(1000 MT)

Wheat Supplies: 2015/2016 production is estimated at 5.6 million metric tons (mmt), down from the previous year due to heavy rains in the south at the beginning of the season. The quality of the wheat harvest was negatively impacted by heavy rains in the southern region, which will require Brazil to import more high quality wheat this year.

Wheat Trade: 2015/2016 imports are at forecast 6.5 mmt, up 17 percent from the previous year due to lower quality domestic wheat and the need to blend the domestic with higher quality imported wheat to meet baking specifications. Argentina has returned to the market as the largest supply of wheat to Brazil, following two years where they were unable to ship large quantities. It's expected that Argentine imports will continue, especially now that the new government there has eliminated export restrictions on wheat. However, U.S. wheat may still be a viable option for some Brazilian millers, depending on the quality of the Argentine wheat. U.S. imports are typically strongest in July and August. Despite signing an agreement with Russia to import more Russian wheat, none has been exported to Brazil in 2015.

2015/2016 exports are forecast at 1.5 mmt, a slight decrease from the previous year. In December 2015, Brazil exported 337,000 metric tons, mainly to Vietnam, Thailand, and the Philippines. Exports tend to peak between December and April.

Wheat Consumption: 2015/2016 consumption is forecast down at 10.4 mmt, a 1 percent decrease from the previous year. Prices of pastas and crackers are forecast to increase 6% in 2016 due to the strong dollar and inflation, which could further reduce consumption. There have been media reports that two of the largest millers in Brazil, Bunge and M. Dias Branco, colluded to control the price of wheat flour in the domestic markets in the North and Northeast regions of Brazil and are being investigated by the Administrative Council for Economic Defense (CADE).

Corn

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Mar 2014

Mar 2015

Mar 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

15800

15800

15750

15750

15800

15800

Beginning Stocks

9150

9150

13972

13972

10072

10072

Production

80000

80000

85000

85000

81500

81500

MY Imports

789

789

600

600

600

600

TY Imports

846

846

534

534

600

600

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

89939

89939

99572

99572

92172

92172

MY Exports

20967

20967

32500

32500

25500

26500

TY Exports

22041

22041

21909

21909

35000

35000

Feed and Residual

46000

46000

48000

48000

50000

49000

FSI Consumption

9000

9000

9000

9000

9000

9000

Total Consumption

55000

55000

57000

57000

59000

58000

Ending Stocks

13972

13972

10072

10072

7672

7672

Total Distribution

89939

89939

99572

99572

92172

92172

(1000 HA) ,(1000 MT)

Corn Production: 2014/2015 production is forecast at a record 85 mmt, due to excellent conditions for the second “safrinha" crop. 2015/2016 production is estimated at 81.5 mmt based on normal weather. A study released by the Mato Grosso Institute of Agricultural Economics (IMEA) projects that corn production in the state of Mato Grosso will double by 2025 to over 70mmt . The study sites advances in technology and farm management, increases in area for the second “safrinha" crop, and improvements in infrastructure as the main drivers of the expansion.

Corn Trade: 2014/2015 corn exports are estimated at a record 32.5 mmt, based mainly on the strong dollar. The dollar appreciated over 30 percent in relation to the Brazilian Real (BRL) in 2015, making exports very lucrative for producers despite low global prices. The strong dollar will continue to incentivize exports into January and February.

2015/2016 exports are estimated at 26.5 mmt, an 18 percent decrease from the previous year's record, based on a smaller forecast. Due to the economic situation in Brazil and the need for state governments to increase revenue, several corn producing states are considering leveeing an export tax on corn and soybeans.

Corn Consumption: 2014/2015 consumption is forecast at 57 mmt with continued, but slowed, growth expected into 2015/2016 at 58 mmt. Because of the weakening Brazilian currency, producers are choosing to sell their grain for export, as opposed to domestic consumption. According to the Brazilian feed industry, the price of corn for domestic use is increasing due to low stocks and is putting pressure on the pork and poultry sectors. If the Brazilian currency continues to weaken into 2015/2016, the expansion of the pork and poultry sector may begin to slow, slowing the pace of domestic corn consumption.

Rice

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Apr 2014

Apr 2015

Apr 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2400

2400

2295

2295

2300

2200

Beginning Stocks

528

528

639

639

654

489

Milled Production

8300

8300

8465

8400

8000

8000

Rough Production

12206

12206

12449

12353

11765

11765

Milling Rate (.9999)

6800

6800

6800

6800

6800

6800

MY Imports

530

530

450

450

700

700

TY Imports

586

586

350

400

700

700

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

9358

9358

9554

9489

9354

9189

MY Exports

819

819

1000

1000

900

900

TY Exports

852

852

850

900

800

800

Consumption and Residual

7900

7900

7900

8000

7900

7900

Ending Stocks

639

639

654

489

554

389

Total Distribution

9358

9358

9554

9489

9354

9189

(1000 HA) ,(1000 MT)

Rice Production: 2014/2015 milled production is forecast at 8.4 mmt a slight decrease from the previous estimate due to heavy rains and flooding in the largest rice producing state of Rio Grande do Sul. Initial reports forecasts losses of up to 15 percent of the crop in the state, but favorable weather following the floods helped to reduce the anticipated losses to an estimated 4 percent. 2015/2016 milled production is forecast down to 8 mmt due to increased input costs, like irrigation and electricity, which have increased in 2015.

Rice Trade: 2014/2015 imports are estimated at 450,000 mt in line with yearly trends. 2014/2015 exports are estimated at 1 mmt, up 18 percent from the previous year on a strong dollar incentivizing exports.

Rice Consumption: 2014/2015 consumption is forecast at 8 mmt, up slightly from the previous year. Brazilians of all class traditionally consume rice daily, so the economic downturn will not likely cause a large increase in rice consumption, but it will reduce the amount of wheat-based products consumed.