Report Highlights:

2015/2016 wheat production is forecast at 6 million metric tons (mmt), down from previous estimates due to heavy rains in the south. 2014/2015 corn production is forecast at a record 85 mmt, due to excellent conditions for the second "safrinha" crop. First "full season" corn is expected to decrease 6 percent this year, as producers make a switch to more profitable soybeans. 2015/2016 milled rice production is forecast at 8 mmt, down 6 percent from the previous year. Wet weather in the largest producing state of Rio Grande do Sul has delayed planting, which could reduce yields.

Wheat

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2016

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

1087

487

Production

5300

5300

6000

6000

6000

6000

MY Imports

7066

7066

5600

5000

6700

6300

TY Imports

7061

7061

5869

5869

6700

6300

TY Imp. from U.S.

4073

4073

1296

1296

0

500

Total Supply

13367

13367

13487

12887

13787

12787

MY Exports

80

80

1700

1700

1000

1500

TY Exports

81

81

1688

1688

1000

1500

Feed and Residual

600

600

300

300

600

600

FSI Consumption

10800

10800

10400

10400

10600

10000

Total Consumption

11400

11400

10700

10700

11200

10600

Ending Stocks

1887

1887

1087

487

1587

687

Total Distribution

13367

13367

13487

12887

13787

12787

(1000 HA) ,(1000 MT)

Wheat Supplies:2015/2016 production is forecast at 6 million metric tons (mmt), down from previous estimates due to heavy rains in the south. The wet weather could damage the quality of the wheat in Rio Grande do Sul, the second largest wheat producing state in Brazil, where the harvest is underway. The largest producing state of Parana, where the harvest is almost complete, was not as affected by the rains and is expected to produce about 3.6 mmt. Irrigated wheat area is expanding into the Central West area with good results, but it is still a small percentage of production.

Wheat Trade: 2015/2016 imports are at forecast 6.3 mmt, down from previous estimates due to the strong U.S. dollar making imports more expensive. Brazil must import higher quality wheat to blend with their domestic wheat to meet the baking specifications for French bread rolls, which are widely consumed in Brazil. CONAB estimates that the higher cost of imports will cause the Northeast Region, which typically imports about 2 mmt per year because the transport is less expensive than shipping from the South, to reduce imports and use more domestic wheat.

The Brazilian Minister of Agriculture recently signed an agreement with Russia to import Russian wheat, but it is unlikely that it will result in substantial trade, as the Russian wheat is lower quality wheat than what is needed to blend with the domestic wheat to meet baking specifications.

2015/2016 exports are forecast at 1.5 mmt, a slight decrease from the previous year. While the strong dollar is incentivizing exports of other commodities, Brazil needs its domestic wheat for blending with the high quality imported wheat. The low quality wheat from Rio Grande do Sul will need to be exported, as it can't be used for domestic consumption and there is a very small market for feed wheat in Brazil. Due to the lower supply and good price for wheat, it is not expected that the government will intervene in the market using the PEPRO program, which provides producers with a minimum price, if the price falls below that amount. Some producers have still not been paid from last year due to the large bureaucracy and amount of paperwork required.

Wheat Consumption:2015/2016 consumption is forecast down at 10.6 mmt, a 1 percent decrease from the previous year. It's expected that prices will increase due to the strong dollar raising the price of imports and the overall economic situation which has increased the costs of production. Higher costs for power, transport, and labor were initially absorbed by the mills, but will, at least in part, need to be passed on to the consumer as the exchange rate makes imports and inputs more expensive. Consumption is likely to continue to decrease slightly as consumers on tight budgets will reduce wheat-based products or switch to rice. Abitrigo, the Brazilian Wheat Industry Association, noted that per person consumption had fallen from 54kg in 2014 to 42kg in 2015.

The industry is concerned that non-scientific based diets, such as the "gluten-free" movement will further decrease consumption over time. They are working on a communication strategy to educate consumers about health and nutrition as it relates to wheat-based products. The industry is also working in increase the standard and quality of bread making facilities, as bakeries can range from large scale and high end, to very small with just one oven.

Corn

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Mar 2014

Mar 2015

Mar 2015

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

15800

15800

15750

15750

15500

15500

Beginning Stocks

14150

14150

18972

18972

18572

19572

Production

80000

80000

85000

85000

80000

80000

MY Imports

789

789

600

600

600

600

TY Imports

846

846

600

600

600

600

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

94939

94939

104572

104572

99172

100172

MY Exports

20967

20967

29000

28000

25000

26000

TY Exports

22041

22041

22000

22000

31000

31000

Feed and Residual

46000

46000

48000

48000

50000

50000

FSI Consumption

9000

9000

9000

9000

9000

9000

Total Consumption

55000

55000

57000

57000

59000

59000

Ending Stocks

18972

18972

18572

19572

15172

15172

Total Distribution

94939

94939

104572

104572

99172

100172

(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. First crop "full season" corn is expected to decrease 6 percent this year, as producers make a switch to more profitable soybeans. 2015/2016 production is estimated at 80 mmt based on the assumption of normal weather. Two-thirds of total corn production is now second "safrinha" corn planted directly after soybeans are harvested, which will begin in February. If the rainy season ends in April, as opposed to an extended rainy season into May or June, we may see a much smaller second crop for 2015/2016.

Corn Trade:2014/2015 corn exports are estimated at a record 28 mmt, due to a record crop, a strong dollar, and continued demand from Vietnam and Iran. The window for exporting corn usually begins in July and tapers off in January/February. This year may see extended shipments into February/March due in part to an extended soybean shipments, delays caused by the grain inspectors' strike, and loading delays at the port of Paranagua due to rain. 2015/2016 exports are estimated at 26 mmt, a slight decrease from the previous year's record, due to a smaller forecast crop.

Corn Consumption:2014/2015 consumption is expected increase 3.5 percent to 57 mmt, based on increased feed use in the expanding poultry and swine sectors. The expansion is expected to continue in 2015/2016 with total consumption forecast at 59 mmt for 2015/2016.

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

2330

2330

2300

2300

Beginning Stocks

528

528

656

656

756

756

Milled Production

8300

8300

8500

8500

8000

8000

Rough Production

12206

12206

12500

12500

11765

11765

Milling Rate (.9999)

6800

6800

6800

6800

6800

6800

MY Imports

547

547

500

500

700

700

TY Imports

586

586

450

450

700

700

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

9375

9375

9656

9656

9456

9456

MY Exports

819

819

1000

1000

900

900

TY Exports

850

850

800

800

800

800

Consumption and Residual

7900

7900

7900

7900

7950

7950

Ending Stocks

656

656

756

756

606

606

Total Distribution

9375

9375

9656

9656

9456

9456

(1000 HA) ,(1000 MT)

Rice Production: 2015/2016 milled production is forecast at 8 mmt, down 6 percent from the previous year. Wet weather in the largest producing state of Rio Grande do Sul has delayed planting, which could reduce yields. The strong dollar is making producers more cautious about investing in inputs and technology, which could also have an impact on yields.

Rice Trade: 2014/2015 imports are estimated at 500,000 mt. Mercosul partners Paraguay, Uruguay and Argentina are the main suppliers of rice imports to Brazil. 2014/2015 exports are estimated at 1 mmt, up 18 percent from the previous year. The strong dollar is facilitating rice exports.

Rice Consumption: 2014/2015 consumption is forecast at 7.9 mmt, the same as the previous year. Consumption remains steady, but if the economic situation continues to worsen, there could be an increase as people switch from wheat-based products to rice.