Report Highlights:

2014/2015 wheat production is estimated at 6.5 million metric tons (mmt), up 18 percent from the previous year due to an 18 percent increase in area based on higher prices at planting. 2014/2015 corn production is estimated at a record 82 mmt, due to an extended rainy season and near perfect weather conditions for the second "safrinha" crop for the fourth year in a row. 2014/2015 rice production is estimated at 8.5 mmt, a 2 percent increase from the previous year due to better than expected weather during the final growing cycle.

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

2,200

2,200

2,730

2,730

2,600

2,600

Beginning Stocks

1,001

1,001

1,887

1,887

1,187

1,287

Production

5,300

5,300

6,000

6,500

6,500

6,500

MY Imports

7,066

7,066

6,300

6,300

6,500

6,500

TY Imports

7,061

7,061

6,000

6,000

6,500

6,500

TY Imp. from U.S.

4,134

4,134

0

2,700

0

1,000

Total Supply

13,367

13,367

14,187

14,687

14,187

14,287

MY Exports

80

80

1,800

1,800

1,000

1,000

TY Exports

81

81

1,800

1,700

1,000

1,000

Feed and Residual

600

600

300

600

600

600

FSI Consumption

10,800

10,800

10,900

11,000

11,000

11,100

Total Consumption

11,400

11,400

11,200

11,600

11,600

11,700

Ending Stocks

1,887

1,887

1,187

1,287

1,587

1,587

Total Distribution

13,367

13,367

14,187

14,687

14,187

14,287

1000 HA, 1000 MT, MT/HA

Wheat Supplies:2014/2015 production is estimated at 6.5 million metric tons (mmt), up 18 percent from the previous year due to an 18 percent increase in area based on higher prices at planting. 2015/2016 production is forecast at 6.5 mmt, in line with yearly trends.

Wheat Trade: 2014/2015 MY imports are forecast at 6.3 mmt, an 11 percent decrease from the previous year which was a poor production year. Argentina has re-entered the market as the main supplier, but the United Stated has maintained a portion of the market shared due to its quality and reliability of shipments. While Mercosul enjoys duty free access to the Brazil market and made up 75 percent of the market between October and May, North American wheat constituted 25 percent of total imports, 21 percent of which was U.S. wheat which included a 10 percent Common External Tax (TEC).

Last year, the TEC was decrease to zero percent between June and August to control inflation in the run-up to the October Presidential election, which greatly benefited North American imports. The Brazilian Council on Foreign Trade (CAMEX) has not made any announcements to lower the tariff again this year, and their next meeting has not been scheduled yet. It seems unlikely that CAMEX will reduce the TEC again this year with adequate supplies and without the political pressure of an election. However, continued political uncertainty in Argentina, combined with labor disputes at the ports could provide continued openings for U.S. wheat.

Wheat Consumption:2014/2015 consumption is forecast at 11.6 mmt, up slight from the previous year. 2015/2016 consumption is expected to grow slightly to 11.7 mmt.

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

15,800

15,800

15,300

15,300

14,800

14,800

Beginning Stocks

14,150

14,150

18,972

18,972

20,272

19,272

Production

80,000

80,000

81,000

82,000

75,000

79,000

MY Imports

789

789

800

800

800

800

TY Imports

846

846

800

800

800

800

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

94,939

94,939

100,772

101,772

96,072

99,072

MY Exports

20,967

20,967

23,500

26,000

22,000

22,000

TY Exports

22,041

22,041

21,500

22,000

24,000

21,000

Feed and Residual

46,000

46,000

48,000

47,500

50,000

50,000

FSI Consumption

9,000

9,000

9,000

9,000

9,000

9,000

Total Consumption

55,000

55,000

57,000

56,500

59,000

59,000

Ending Stocks

18,972

18,972

20,272

19,272

15,072

18,072

Total Distribution

94,939

94,939

100,772

101,772

96,072

99,072

1000 HA, 1000 MT, MT/HA

Corn Production:2014/2015 production is estimated at a record 82 mmt, due to an extended rainy season and near perfect weather conditions for the second "safrinha" crop for the fourth year in a row. The "safrinha," which roughly translates into "little crop" now constitutes nearly 65 percent of the total crop. While most of the first crop goes to domestic consumption, a majority of the "safrinha" crop is exported. 2015/2016 production is forecast at 79 mmt, on the continued growth of the "safrinha" crop, but producers will likely reduce inputs based on the strengthening dollar and continued low global commodity prices.

While the weakening real provides more income for farmers, the higher cost of imported inputs will offset and gains from the exchange rate. Low global corn prices would normally be a disincentive to cultivate additional crops, but the government's PEPRO program allows producers to be reimbursed for the difference between market price and the government-set minimum price through auctions. As of June, the market price for corn in Mato Grosso has already fallen below the minimum price set by the government. However, the government has not announced any auctions yet, and while the government announced a 20 percent increase in the budget for agriculture, it's uncertain to what extent the government will support PEPRO this year. On farm storage is limited, but in the face of low prices, farmers do have the option to use silo bags, which have been increasing in their use.

Corn Trade: MY 2014/2015 corn exports are estimated at 26 mmt, due to a larger than expected "safrinha"crop. According to trade data, 1.3 mmt of Brazilian corn has been shipped to Vietnam so far in 2015, by far Brazil's largest market. However, it's possible that at least some of those shipments are getting into China, as there have been no documented shipments to China in 2015, despite having signed a corn trade agreement in 2013. Additionally, in an official visit in May, the Brazilian and Chinese governments announced multiple initiatives to increase trade between the two countries, including investments in infrastructure to facilitate the export of grains to China. Exports will begin to pick up in late July and early August and continue through December at an estimated pace of about 2.5 to 3 mmt per month.

Corn Consumption: 2014/2015 feed use is expected to increase slightly to 47.5 mmt on the growing poultry and swine sectors. The sectors are expected to grow about 3 percent in 2014/2015. 2015/2016 growth should continue with feed consumption forecast up to 50 mmt.

Rice

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Apr 2014

Apr 2015

Apr 2015

Brazil

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

2,400

2,400

2,330

2,330

2,300

2,450

Beginning Stocks

528

528

656

632

736

932

Milled Production

8,300

8,300

8,430

8,500

8,000

8,300

Rough Production

12,206

12,206

12,397

12,500

11,765

12,206

Milling Rate (.9999)

6,800

6,800

6,800

6,800

6,800

6,800

MY Imports

547

586

550

700

700

700

TY Imports

586

624

600

700

700

700

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

9,375

9,414

9,636

9,832

9,436

9,932

MY Exports

819

882

1,000

900

900

900

TY Exports

850

930

800

800

800

800

Consumption and Residual

7,900

7,900

7,900

8,000

7,950

7,950

Ending Stocks

656

632

736

932

586

1,082

Total Distribution

9,375

9,414

9,636

9,832

9,436

9,932

1000 HA, 1000 MT, MT/HA

Rice Production:2014/2015 rice production is estimated at 8.5 mmt, a 2 percent increase from the previous year due to better than expected weather during the final growing cycle. While it's still early to tell, since the 2014/2015 crop has just been harvested, 2015/2016 production is forecast down 2 percent to 8.3 mmt assuming normal weather. Production in Brazil is following global trends and remaining stable.

Rice Trade: 2014/2015 imports are estimated at 700,000 mt and exports at 900,000 mt, in line with yearly trends. Trade is also following global trends with a quiet market and Brazil will need to find export markets. With exception of May, when Brazil shipped 58,000 mt to Cuba, the pace of exports this year has been consistently below the 5 year average. Post estimates that similar market conditions will persist in 2015/2016 and forecast imports and exports as the same as the previous year.

Rice Consumption: 2014/2015 consumption is forecast at 8 mmt, a less than one percent increase from the previous year. Some media outlets have reported that the current economic downturn will force consumers to increase rice consumption while making price based decisions. 2015/2016 consumption is forecast slightly higher based on population increases and the slowing of growth of the middle class.