Highlights

2016/2017 wheat production is estimated at 6.7 million metric tons (mmt), up 17 percent from the previous year based on good weather driving better quality. The larger production forced the government to intervene with price supports. 2016/2017 corn production is estimated at 84 mmt, a 20 percent increase from the previous year, due to a return to normal weather. Area is expected to be nearly the same as 2015/2016 at 16.1 mHA, but yields are expected to be much better. 2015/2016 milled rice production is forecast at 7.2 mmt, down 15 percent from the previous year on reduced area. Higher production costs are incentivizing some farmers to switch to other crops.

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

2120

2120

Beginning Stocks

1887

1887

870

870

1596

1596

Production

6000

6000

5540

5540

6700

6700

MY Imports

5374

5374

6745

6745

6700

6500

TY Imports

5869

5869

5922

5922

7300

7000

TY Imp. from U.S.

1296

1296

422

422

0

1300

Total Supply

13261

13261

13155

13155

14996

14796

MY Exports

1691

1691

1059

1059

1600

1400

TY Exports

1688

1688

1063

1063

1600

1400

Feed and Residual

300

300

500

500

700

700

FSI Consumption

10400

10400

10000

10000

10800

10400

Total Consumption

10700

10700

10500

10500

11500

11100

Ending Stocks

870

870

1596

1596

1896

2296

Total Distribution

13261

13261

13155

13155

14996

14796


Wheat Supplies: 2016/2017 wheat production is estimated at 6.7 million metric tons (mmt), up 17 percent from the previous year based on good weather driving better quality. The wheat harvest will finish in January with already good yields and quality, but the larger crop also pushed prices down below the minimum and forced the government to intervene with two specific programs:

• Premium for Product Outflow Program (PEP): Through this program, the government pays the difference between the prevailing market price and the minimum price of the product to the buyers. The objective of PEP is to move commodities from areas of high product concentration to areas of need, typically in the demographically-sparse parts of the North and Northeast regions of the country. However, in addition to the ability to ship the product domestically, PEP participants can also export the product and still receive the premium.

• The Equalization Premium Paid to the Producer (PEPRO): PEPRO functions similar to PEP but the premium is granted to the farmer or cooperative which sells the product. The government pays the difference between the market price and the minimum price directly to the producer once the sale has been completed and a proof of sale, either domestically or for export, has been received.

The government announced the use of both PEP and PEPRO to support wheat in November 2016 with an establish limit of R$150 million (US $45 million) in support.

Wheat Trade: 2016/2017 imports are forecast at 6.5 mmt, down slightly from the previous year due to higher stocks. There was a strong pace of imports at the end of 2016 due to a demand for higher quality imports, which lead to a large increase in North American imports. Between October and December this year, Brazil imported 658,586 mt of U.S. wheat. Post expects that Brazil will continue to import high quality U.S. wheat. 2016/2017 wheat exports are expected to increase32 percent to 1.4 mmt tons due to a large supply and government intervention to supplement low prices.

Wheat Consumption: 2016/2017 consumption is up 6 percent to 11.1 mmt. Late in 2016, some pork and poultry producers used wheat to feed their animals due to high corn prices. But as the harvest finished for the first crop corn, prices came down and those farmers will resume using corn for feed.

Corn

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Mar 2015

Mar 2016

Mar 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

15750

15750

16000

16000

16700

16100

Beginning Stocks

13972

13972

7842

7842

5842

5342

Production

85000

85000

67000

67000

86500

84000

MY Imports

331

331

3000

3000

600

600

TY Imports

534

534

1566

1566

1800

1800

TY Imp. from U.S.

0

0

1

0

0

0

Total Supply

99303

99303

77842

77842

92942

89942

MY Exports

34461

34461

15000

16000

28000

26000

TY Exports

21909

21909

35382

35382

22000

20000

Feed and Residual

48000

48000

48500

48000

49500

49500

FSI Consumption

9000

9000

8500

8500

9000

9000

Total Consumption

57000

57000

57000

56500

58500

58500

Ending Stocks

7842

7842

5842

5342

6442

5442


Corn Supplies
: 2016/2017 production is estimated at 84 mmt, a 25 percent increase from the previous year, due to a return to normal weather. Area is expected to be nearly the same as 2015/2016 at 16.1 mHA, but yields are expected to be much better. In 2015/2016 the rains ended early, severely impacting the second “safrinha” crop corn. It is expected that this year’s second crop will be fully planted by middle of March, so as to maximize the benefits of the seasonal rains and boost yields before the season ends, normally in May.

Corn prices spiked in June due to the poor yields of the second “safrinha” crop, but came back down toward the end of 2016 as the first corn crop was harvested. Prices are now close to where they were last year at this time. Corn Trade: 2015/2016 corn exports are estimated at 16 mmt, down 62 percent from last year’s record exports due to dry weather affecting yields, with the largest markets being Iran, Vietnam, and Japan.

2015/2016 imports are estimated at a record 3 mmt due to the poor second “safrinha” crop, mainly from Argentina and Paraguay. The last record for imports was 2 mmt in 1985. To increase imports, Brazil reduced the tariff on corn to zero percent through 2016 for non-Mercosul countries. There was an expectation that U.S. corn would enter Brazil en masse, but between January and December 2016, only 532,000 mt were shipped, up only six percent from 2015 when the ten percent tariff was in place. There was an initial delay in approval of U.S. biotech events that coincided with the beginning of the first crop harvest. The tariff returned to ten percent in 2017.

2016/2017 imports are forecast to at 600,000 mt, on a larger crop and better yields than the previous year. 2016/2017 exports are expected to rebound to 26 mmt, on good weather and planting within the ideal window.

Corn Consumption: 2015/16 consumption is forecast at 56.5 mmt due to higher prices forcing some pork and poultry producers to find alternative feed sources. 2016/2017 consumption is expected to increase three percent to 58.5 mmt on normal weather and a return to corn use as feed.

Rice


Rice Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Apr 2015

Apr 2016

Apr 2017

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2295

2295

2010

2000

1950

2000

Beginning Stocks

639

639

641

641

251

241

Milled Production

8465

8465

7210

7200

7820

7900

Rough Production

12449

12449

10603

10588

11500

11618

Milling Rate (.9999)

6800

6800

6800

6800

6800

6800

MY Imports

393

393

800

900

650

650

TY Imports

363

363

731

731

650

650

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

9497

9497

8651

8741

8721

8791

MY Exports

931

931

600

700

600

700

TY Exports

895

895

641

641

650

700

Consumption and Residual

7925

7925

7800

7800

7850

7900

Ending Stocks

641

641

251

241

271

191

Total Distribution

9497

9497

8651

8741

8721

8791


Rice Trade: 2015/2016 imports are estimated at 900,000 mt, to meet demand in the face of extremely low stocks. Most imports are of similar quality and type of rice from Brazil’s neighbors - Paraguay, Uruguay and Argentina. 2015/2016 exports are estimated at 700,000 mt, a 25 percent reduction from the previous year. Brazil is losing market share in Venezuela and Cuba. This is particularly true in Venezuela, where U.S. rice displaced some of the Brazilian market share in 2016. 2016/2017 exports are forecast to remain the same at 700,000 mt, as Brazil will likely keep its major export markets in West Africa.Rice Production: 2015/2016 milled rice production is forecast at 7.2 mmt, down 10 percent from the previous year on reduced area. Higher production and input costs incentivized some farmers to switch to other crops. 2016/2017 milled production is forecast at 7.9 mmt on higher anticipated prices.

Average annual prices were nearly 30 percent higher in 2016 than in 2015. 2015/2016 stocks are estimated lower at 241,000 mt, of which 30,112 mt are held publicly. This is keeping upward pressure on prices. 2016/2017 stocks are forecast even lower at 191,000mt. The government has a mechanism in place to intervene and purchase public stocks, but only if the price falls below the minimum set price.

Rice Consumption: 2015/2016 consumption is expected to increase slightly to 7.80 mmt due to population growth.