2015/2016 Corn Supplies: In 2015/16 planted area is expected to remain the same as in the previous year. High land prices in the largest producing states of Mato Grosso and Parana have made it difficult for producers to expand area in the near term. Tighter credit due to the economic slowdown in Brazil will also be an issue for producers in 2015/16 and another reason area is unlikely to expand. That said, inexpensive land in the Northern states of Amapa, Para, and Roraima may incentivize expansion in the north of Brazil over the next few years. As agricultural infrastructure is improved in the region, it will become more profitable to produce in the north as the proximity to new ports and roads will decrease transport costs.

Production for 2015/16 is expected to decrease 1 mmt to 75mmt. The current exchange rate at US$1 = BR 3.2, a more than 30 percent jump from the same time last year. While this makes exports more profitable now, it also increases the cost of production for 2015/16. Producers will likely seek to reduce their inputs costs, as most of the inputs are imported. Farmers may lessen the amounts of fertilizers and pest control products or switch to second or third tier biotechnology. In addition to the exchange rate, transport costs continue to rise. Paradoxically, while global oil prices are at their lowest in years, Brazilian fuel prices are going up due to government intervention and a stricter fiscal policy aimed at increasing government revenue.

2015/2016 Corn Consumption:In 2015/16 corn consumption is estimated at 57 mmt, a one percent increase from the previous year based on the growing poultry and pork sectors. The Brazilian Feed Industry (Sindirações) forecast corn for feed at 39.7 mmt, representing about 60 percent of total feed, which is mainly used for pork and poultry. This number does not include silage. The majority of beef and dairy cattle are grass-fed, but about 5 percent of beef cattle use corn feed lots. These feed lots are only in use during the dry season (May – September) due to the dry conditions of pastureland in certain areas. This number is not expected to change due to the already high price of cattle and the investment it would require.

There has been a lot of media coverage about the feasibility of corn ethanol in the face of low global prices and rising costs of production, especially in the principal producing state of Mato Grosso and the Central-West region. It was recently announced that the National Development Bank (BNDES) will finance four new corn-based ethanol plants in the region to help absorb the supply of second crop "safrinha" corn. The problem for the state, however, lies in the government's requirement that ethanol must first go to a distributor before being sold to consumers. These distributors are often located far from the producing region, increasing transport costs. There are several "flex plants" operating in the region that have been retrofitted to process both sugarcane and corn. Normally, the sugarcane plants only operate 9 months out of the year, but with the retrofitting, they can produce corn ethanol for the remaining 3 months. Even with the government financing and public support, corn ethanol represents less than one percent of total ethanol production.

2015/2016 Corn Trade: Imports for 2015/16 are estimated at 800,000 metric tons, the same as the year before. 2015/16 exports are expected to decrease by 5 percent to 20 mmt due to lower production. Logistics are expected to improve in 2015/16 as new ports come online and roads are improved. The government of Brazil has made progress on modernizing and expanding the port system by passing regulatory reform to increase efficiency to reduce costs, after the infrastructural bottlenecks seen in 2013. Some of the measures include; increasing port depths through dredging, allowing private ports to compete with public ports by easing restrictions on third party cargo, and reducing bureaucratic bottlenecks. New ports are coming online as part of the "Northern Arc" project, which is seeking to increase export capacity in the Amazon River Basin and the Northeast ocean ports.

2014/15 Corn Supplies: In 2014/15 corn area is forecast to drop slightly from the previous year to 15 mHA. Production in 2014/15 is forecast at 76 mmt, a 5 percent decrease from last year, but higher than initial estimates due to improved prices during second "safrinha" crop planting. There was concern earlier in the year that delays in soybean planting would lead to delays in the harvest and thus, delays in the second "safrinha" crop planting. The worry was that farmers would not be able to get the corn in the ground before the ideal planting window closed in mid-March, but good harvesting and planting weather allowed for 90 percent of the second "safrinha" crop to be planted within the window.

2014/15 Corn Consumption: Corn consumption in 2014/15 is forecast at 56.5mmt, a 3 percent increase from the previous year based on the continued expansion of the pork and poultry sectors. However, growth in the sector is a slower pace than previous years due to the economic slowdown and fewer than expected exports of pork and poultry products.

2014/15 Corn Trade: Imports in 2014/15 are forecast at 800,000 metric tons. Exports for 2014/15 are forecast at 21 mmt, the same as the previous year. The largest importers of the grain in 2014 were Iran, Vietnam, and South Korea. A recent truckers strike over higher freight costs halted truck transport across the country in late February created delays in soybean, pork, poultry, and cattle shipments. The strike didn't have a large impact on corn exports as the export season typically begins in June and peaks in October/November, but it highlights the dissatisfaction with the current government. The truckers are threatening another strike on April 22, 2015 if the government does not reduce the cost of diesel fuel.

S&D Corn Brazil

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

15,000

15,000

0

15,000

Beginning Stocks

14,150

14,150

18,950

18,950

0

18,250

Production

80,000

80,000

75,000

76,000

0

75,000

MY Imports

800

800

800

800

0

800

TY Imports

846

846

800

800

0

800

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

94,950

94,950

94,750

95,750

0

94,050

MY Exports

21,000

21,000

20,500

21,000

0

20,000

TY Exports

22,041

22,041

22,000

22,000

0

21,000

Feed and Residual

46,000

46,000

47,500

47,500

0

48,000

FSI Consumption

9,000

9,000

9,000

9,000

0

9,000

Total Consumption

55,000

55,000

56,500

56,500

0

57,000

Ending Stocks

18,950

18,950

17,750

18,250

0

17,050

Total Distribution

94,950

94,950

94,750

95,750

0

94,050

1000 HA, 1000 MT, MT/HA

Brazil Corn Imports

Brazil Import Statistics

Commodity: 1005, Corn (Maize)

Partner Country

Quantity (Units: 1,000 mt)

CY2012

CY2013

CY2014

World

830.44

911.39

773.04

Paraguay

824.31

827.30

768.14

Argentina

5.87

56.03

3.64

United States

0.20

0.51

0.76

Brazil

0.00

0.00

0.39

Bolivia

0.06

0.04

0.09

Spain

0.00

0.02

0.02

Brazil Corn Exports

Brazil Export Statistics

Commodity: 1005, Corn (Maize)

Partner Country

Quantity (Units: 1,000 mt)

CY2012

CY2013

CY2014

World

19801.94

26624.89

20654.64

Iran

2966.92

2168.57

4698.58

Vietnam

73.42

1193.54

3185.38

Korea South

2581.26

3484.88

1900.08

Taiwan

1937.99

2250.72

1484.87

Japan

3049.38

3737.26

1311.81

Indonesia

129.04

1346.01

1261.38

Malaysia

641.17

1002.29

1260.23

Egypt

1846.39

1592.99

1246.23

Saudi Arabia

754.36

1132.38

726.27

Morocco

1003.98

982.04

683.84

Algeria

211.05

766.44

647.12

Dominican Republic

610.56

549.41

328.45

Netherlands

24.27

739.85

293.19

Spain

385.96

784.35

218.16

Tunisia

215.00

288.21

199.53

Cuba

230.57

152.70

177.16

Israel

159.69

195.33

140.36

Venezuela

152.46

97.14

139.74

Jordan

44.85

100.39

109.12

Yemen

0.13

141.74

107.14

United Arab Emirates

79.35

175.84

86.02

Ecuador

34.80

31.03

69.26

Nigeria

53.80

0.40

58.89

Libya

0.00

0.00

53.48

Oman

18.65

36.00

37.50

Portugal

132.56

506.47

35.03

Senegal

0.00

33.57

30.96

Kuwait

83.12

109.67

30.22

Italy

29.80

80.04

28.25

China

79.91

48.18

24.40

Angola

0.04

12.55

16.71

Nicaragua

17.11

38.28

11.33

Turkey

1.94

1.84

9.37

Puerto Rico (U.S.)

58.83

77.56

8.00

Costa Rica

154.22

90.49

7.55

Peru

243.53

128.38

5.55

Paraguay

8.23

6.44

5.15

United States

729.39

1039.16

3.40

Bolivia

1.72

2.83

3.38

Singapore

21.44

0.00

2.81

Argentina

3.26

1.22

1.28

Guyana

0.00

0.87

1.26

Hong Kong

0.05

1.15

1.06

Colombia

467.54

825.29

0.88

Lebanon

0.30

0.00

0.62

France

0.65

10.12

0.55

Virgin Islands (British)

0.00

0.00

0.50

Benin

0.25

0.08

0.45

Togo

0.00

0.00

0.40

India

0.18

2.11

0.33

El Salvador

82.76

37.51

0.29

Honduras

22.35

29.43

0.26

Uruguay

0.00

2.76

0.21

Ghana

0.08

0.05

0.15

Bulgaria

0.25

0.13

0.13

Philippines

2.54

10.64

0.11

Greece

0.00

0.18

0.05

Sudan

0.00

0.00

0.05

Thailand

25.00

49.76

0.05

Montenegro

0.00

0.00

0.03

Liberia

0.00

0.00

0.03

Canada

0.00

0.00

0.02

Panama

80.85

85.67

0.02

Chile

0.05

74.86

0.01

Cape Verde

0.00

0.01

0.01

Brazilian Corn Prices

Monthly Average Corn Prices from the Campinas Region of Sao Paulo

Prices in R$ per 60 kg bag

(discounted by the CDI/CETIP taxes)

CY

2011

2012

2013

2014

Jan

30.35

31.08

32.75

26.83

Feb

31.68

28.40

32.34

30.62

Mar

31.44

28.89

30.71

32.84

Apr

29.94

25.83

26.41

31.18

May

28.69

24.91

26.02

28.75

Jun

30.75

24.13

26.45

26.38

Jul

30.31

29.21

25.00

23.70

Aug

30.20

33.23

24.04

22.92

Sep

31.92

32.12

25.07

22.05

Oct

30.75

31.44

24.12

23.44

Nov

29.81

34.23

25.59

27.59

Dec

28.18

34.91

26.45

27.61

Government Support for Commercialization and Export:

Total government support across all commodities was down over 30 percent from the previous year by weight to 8.3mmt, which is the lowest since 2008. However, over three-fourths of that went to the Equalizing Premium Paid to the Producer (PEPRO) programs for wheat and corn, with corn receiving 5.8 mmt of support through the program.

In September 2014, the government of Brazil reduced the amount of support they were initially willing to provide from R$500 million to R$300 million (US$227 and 136 million, respectively). This signaled that the government may not be able to provide as much support in the face of continued low global prices, an economic slow-down in Brazil, and a government that is trying to rein in spending. The government has the opportunity to update the minimum price once a year, and the price varies by commodity and classification, and by region of the country. This typically takes place in May/June. The minimum price for corn in 2014 in the state of Mato Grosso was R$13.56/60kg (US$2.61/bushel)

Government Support for Corn (Quantity Unit: 1,000 mt)

Program

2008

2009

2010

2011

2012

2013

2014

Acquisition (AGF)

149.5

587.9

103

1.2

0.0

364

15.85

PEP

599.2

4875.1

11,229

0

0

0

0

PROP

531.4

0

0

0

0

0

0

PEPRO

0.0

1,295.5

875

0

0

8,459.20

5,802.58

Total

1,280

6,758.5

12,208

1.2

0.0

8,823.20

5,818.43

Production

58,863.7

51,003.9

56,100

57,514

72,979.5

79,500

75,000

Participation %

2%

13%

21.6%

0

0

11.1%

7.7%

Source: Brazilian Ministry of Agriculture/SPA/DEAGRO and CONAB

2014 VEP CORN Auctions

Auctioned (1,000 mt)

Sold (1,000 mt)

Premium (US$)

Apr

75,171

17,735

$2,637,075

May

171

0

$0

June

342

171

$22,580

Total

75,684

17,906

$ 2,659,655