Highlights

2015/2016 wheat production is estimated at 5.6 million metric tons (mmt), down 6 percent from the previous year as some producer switch to more profitable crops like corn and soybeans. 2015/2016 corn production is estimated at 75 mmt, due to an early start to the dry season having an adverse effect on the second “safrinha" crop. This is down 12 percent from the previous year's record crop. Domestic corn prices have risen dramatically since March, putting pressure on pork and poultry producers. 2015/2016 milled rice production is estimated at 7.6 mmt a 10 percent decrease from the previous based on reduced area in the northeast region of Brazil.

Wheat

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

Oct 2015

Oct 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2730

2730

2450

2450

2100

2100

Beginning Stocks

1887

1887

870

870

1010

870

Production

6000

6000

5540

5600

5300

6000

MY Imports

5374

5374

6000

5700

6000

5300

TY Imports

5869

5869

5800

5300

6000

5300

TY Imp. from U.S.

1296

1296

0

500

0

0

Total Supply

13261

13261

12410

12170

12310

12170

MY Exports

1691

1691

1200

1100

1000

900

TY Exports

1688

1688

1200

1100

1000

900

Feed and Residual

300

300

300

500

300

300

FSI Consumption

10400

10400

9900

9700

9800

9800

Total Consumption

10700

10700

10200

10200

10100

10100

Ending Stocks

870

870

1010

870

1210

1170

Total Distribution

13261

13261

12410

12170

12310

12170

Wheat Supplies: 2015/2016 production is estimated at 5.6 million metric tons (mmt), down 6 percent from the previous year as some producer switch to more profitable crops like corn and soybeans. Favorable weather conditions in the south of Brazil have helped with the planting. Farmers in the state of Rio Grande do Sul have planted 35 percent of their crop so far.

Wheat Trade:2015/2016 imports are at forecast 5.7 mmt, up 6 percent from the previous year based on the pace on imports. 2015/2016 exports are estimated at 1.1 mmt, a slight decrease from the previous year when much of the lower quality wheat was exported. Brazil has already exported most of its wheat for the marketing year and it's expected on that only a few shipments will go out between June and October.

Wheat Consumption

2015/2016 consumption is forecast down at 9.7 mmt, a 7 percent decrease from the previous year. The current economic situation, with inflation over 10 percent, is increasing prices which, in turn, are making some consumers reduce their consumption of crackers and pastas. Compounding the problem, high domestic corn prices are making pork and poultry producers have difficulty sourcing feed and there have been reports of producers using bread quality wheat to feed their animals. Three producers from the South of Brazil have reportedly resorted to feeding chickens and pigs higher-quality grains normally used for human consumption in breads or cookies. Sources estimate that the meat industry has purchased 220,000 tons of bread-quality wheat since May 2016 for feed. If this pattern of human grade wheat consumption for animal use expands, flour prices will also rise. Wheat stocks, like corn, are also very low at an estimated 870,000 mt with only 15,000 mt held in public stocks.

Corn

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Mar 2014

Mar 2015

Mar 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

15750

15750

16000

16200

15800

16000

Beginning Stocks

13972

13972

7842

7842

5942

4342

Production

85000

85000

77500

75000

82000

82000

MY Imports

331

331

1100

1500

600

600

TY Imports

534

534

1000

1200

600

600

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

99303

99303

86442

84342

88542

86942

MY Exports

34461

34461

22500

23000

23000

23000

TY Exports

21909

21909

34500

35000

23000

23000

Feed and Residual

48000

48000

49000

48000

50000

50000

FSI Consumption

9000

9000

9000

9000

9000

9000

Total Consumption

57000

57000

58000

57000

59000

59000

Ending Stocks

7842

7842

5942

4342

6542

4942

Total Distribution

99303

99303

86442

84342

88542

86942

Corn Supplies

2015/2016 production is estimated at 75 mmt, due to an early start to the dry season having an adverse effect on the second “safrinha" crop. This is down 12 percent from the previous year's record crop. Increased corn exports - incentivized by the strong dollar - coupled with the dry weather, has severely restricted domestic corn supplies. Prices have risen dramatically since March, putting pressure on domestic pork and poultry producers. There have been media reports that some producers are feeding their pigs and chickens milling-quality wheat because they are unable to find any corn or feed wheat on the domestic market. The first crop corn, which will start planting in September, could face competition for area with soybean if soybean prices continue to rise. 2015/2016 corn stocks are estimate 4.3 mmt, the tightest they've been since 2011/2012, with only 891,000mt in public stocks.

Corn Trade

2015/2016 corn exports are estimated at 23 mmt, down 33 percent from last year's record exports. Tight supplies, combined with high domestic demand and a reduced second “safrinha" crop are all factors in the expected decrease in exports. Some states are proposing measures to restrict grain exports in their states. For example, the state of Goias in the Central-West of Brazil reinstated a law to limit corn and soybean exports to only 70 percent of total production and eliminate the 3 percent intra-state (ICMS) tax exemption on agricultural exports. Goias produces about 10 percent of the total corn in Brazil. In addition, the federal government is again considering a 2.8 percent export tax on all corn and soybeans as a means to encourage and prioritize domestic sales.

2015/2016 imports are estimated at 1.5mmt, up 77 percent from the previous year due to tight domestic supplies. So far this marketing year, Brazil has imported 335,000 mt, mainly from Argentina and Paraguay. However, neither country has sufficient corn to export large volumes to Brazil for an extended period of time. On April 22, 2016, the interagency trade body CAMEX, reduced the Common External Tariff on non-Mercosul corn imports from eight to zero percent. The measure is valid for up to 1 mmt of corn and 180 days. As of May 2016, no non-Mercosul corn has entered Brazil under this incentive. This is a potential opportunity for U.S. exports, given its current competitiveness, but Brazil's current biotechnology policies may limit what varieties can be imported. The United States has about 13 biotech events approved that are not currently approved in Brazil.

Corn Consumption:2015/16 consumption is forecast at 57 mmt, the same as the previous year. Due to the high domestic price of corn and the uncertain economic situation, it's expected that future growth in the pork and poultry sectors will slow to about 2 percent per year. In the short term, some pork and poultry processing plants have responded by cutting work shifts, enforcing mandatory vacation for employees, shutting down operations, and even prematurely slaughtering animals they are unable to continue feeding.

Rice

Rice

2014/2015

2015/2016

2016/2017

Market Begin Year

Apr. 2014

Apr.2015

Apr 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2295

2295

2025

2100

2300

2300

Beginning Stocks

639

639

641

641

451

491

Production

8465

8465

7600

7600

8500

8500

MY Imports

12449

12449

11176

11176

12500

12500

TY Imports

6800

6800

6800

6800

6800

6800

TY Imp. from U.S.

378

378

800

900

600

600

Total Supply

363

363

700

700

600

600

MY Exports

0

0

0

0

0

0

TY Exports

9482

9482

9041

9141

9551

9591

Feed and Residual

931

931

750

700

800

800

FSI Consumption

895

895

800

700

800

800

Total Consumption

7910

7910

7840

7950

8000

8000

Ending Stocks

641

641

451

491

751

791

Total Distribution

9482

9482

9041

9141

9551

9591

Rice Production

2015/2016 milled production is forecast at 7.6 mmt a 10 percent decrease from the previous year based on reduced area in the northeast region of Brazil. Farmers in the largest producing state of Rio Grande do Sul are expected to use fewer inputs due to raising productions costs and a strong dollar, further reducing production. Stocks continue to be tight at only 491,000 mt, with only 85,000 mt being held by as public stocks by the government.

Rice Trade

2015/2016 imports are estimated at 900,000 mt to meet consumption demands. Brazil's three largest rice suppliers are Paraguay, Argentina, and Uruguay. 2015/2016 exports are estimated at 700,000 mt, down 24 percent from the previous year on higher domestic prices.

Rice Consumption

2015/2016 consumption is expected to increase slightly to 7.95 mmt. Brazilian consumers already eat rice daily, so even though the economic crisis is affecting the consumption on other commodities like corn, wheat, and meat, rice consumption continues to remain steady.