Highlights

2017/2018 wheat production is estimated at 5.6 million metric tons (mmt), down 17 percent from the previous record year on a return to normal yields. 2016/2017 corn production is estimated at a record 95 mmt, a 30 percent increase from the previous year, due to excellent weather for both the first and second “safrinha” crops. 2016/2017 milled rice production is estimated at 8.16 mmt, up 12 percent from the previous year on better yields.

Wheat

Wheat2015/20162016/20172017/2018
Market Begin YearOct 2015Oct 2016Oct 2017
BrazilUSDA OfficialNew PostUSDA OfficialNew PostUSDA OfficialNew Post
Area Harvested245024502120212021002000
Beginning Stocks87087099699620262026
Production554055406730673056005600
MY Imports
67456745
6800
68006900
6900
TY Imports
592259227500750069006900
TY Imp. from U.S.
42242205000
500
Total Supply
1315513155145261452614526
14526
MY Exports
1059105980080010001000
TY Exports
106310638008001000
1000
Feed and Residual
500500800800500
500
FSI Consumption
106001060010900109001110011000
Total Consumption
1110011100117001170011600
11500
Ending Stocks
996
996
2026
2026
1926
2026
Total Distribution
131551315514526145261452614526
Yield
2.26122.26123.17453.17452.66672.8

Wheat Supplies: 2017/2018 wheat production is estimated at 5.6 million metric tons (mmt), down 17 percent from the previous record year on a return to normal yields. Planting in the south of Brazil began in May and the wheat will be harvested in late 2017. 2016/2017 production is estimated at a record 6.73 million metric tons (mmt).

Wheat Trade: 2016/2017 imports are forecast at 6.8 mmt, up slightly based on higher sales at the end of 2016. 2017/2018 imports are expected to rise to 6.9 mmt due to an increased demand for high quality wheat. Recently, the president of the Brazilian Wheat Millers Association (ABITRIGO) told reporters that he is concerned that the quality of Argentine wheat has fallen, and that Brazilian millers are looking to receive higher quality wheat from Argentina this year. 2016/2017 exports are forecast at 800,000 mt based on the pace of sales. 2017/2018 exports are expected to increase to 1 mmt on higher production and less wheat used for feed due to a record corn crop.

Wheat Consumption: 2016/2017 consumption is estimated at 11.7 mmt, based on recent statistics from CONAB, Brazil’s agriculture statistics agency. 2017/2018 wheat consumption should continue to keep pace with population growth at 11.5 mmt, but the use of feed wheat will decline.

Corn

Corn2015/20162016/20172017/2018
Market Begin YearMar 2016Mar 2017Mar 2017
BrazilUSDA OfficialNew PostUSDA OfficialNew PostUSDA OfficialNew Post
Area Harvested160001600017500172001770017700
Beginning Stocks7842784267696769926911269
Production670006700096000950009500090000
MY Imports34233423500500300300
TY Imports1566156622002200300300
TY Imp. from U.S.110000
Total Supply7826578265103269102269104569101569
MY Exports139961399634000320003400030000
TY Exports353823538223000220003300029000
Feed and Residual490004900051000500005200050500
FSI Consumption850085009000900090009000
Total Consumption575005750060000590006100059500
Ending Stocks67696769926911269956912069
Total Distribution7826578265103269102269104569101569
Yield4.18754.18755.48575.52335.36725.0847

Corn Supplies: 2016/2017 corn production is estimated at a record 95 mmt, a 30 percent increase from the previous year, due to excellent weather for both the first and second “safrinha” crops. The second crop, which is currently being harvested, may have some issues with quality in a few specific areas, but overall is in good condition. This year, the second crop will make up about 67 percent of the total corn crop in Brazil. Storage options may be limited, however, due to record corn and soybean crops competing for the same space.

In contrast to last year, when prices spiked from poor yields, prices in the largest producing state of Mato Grosso have fallen below the minimum price set by the government. Prices in Mato Grosso are currently ranging between R$13.25 and R$18.20/60kg sack (USD 1.75/bu and 2.41/bu), depending on the region of the state. This triggered government intervention in the form of domestic support programs, two of which (PEP and PEPRO) were used for wheat earlier in the year:

• 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 a minimum price is R$16.50/60kg sack (about USD 2.18/bu)

• 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 a minimum price is R$16.50/60kg sack (about USD 2.18/bu)

• Contracts Option (COV): This is a futures option offered through the government to producers/cooperatives to protect the producer from the risks of falling prices. The government authorized up to R$300 million (USD 94 million) for up to 1mmt of corn in Mato Grosso state. The minimum price for the future sale is R$17.87/60kg sack (roughly USD 2.36/bushel). 2017/2018 corn production is forecast at 90 mmt. Planting for the first crop will begin in September, which is about one third of the total corn crop. The second “safrinha” crop will be planted directly after the soybean harvest in February or March. The quality and yields of that crop will depend on rains in before the dry season starts in May.

Corn Trade: 2016/2017 corn exports are estimated at 32 mmt, up substantially from last year, due to better than expected rains at the end of the rainy season for the second “safrinha” crop, as much of the second crop is exported. The low prices are making Brazilian corn more competitive and Brazil is actively seeking new markets. In May, a delegation from Mexico negotiated the sale of 300,000 mt of Brazilian corn, a record for sales to Mexico. The exports are benefiting from the domestic support programs, as producers will not feel pressure to store their grains to wait for better prices, and traders are able to buy cheap Brazilian corn. In addition to domestic support, a weakening currency, due to deepening political uncertainty, will also incentive exports. 2017/2018 exports are expected to remain steady at 30 mmt, assuming the rains end in May or later.

2016/2017 imports are forecast to at 500,000 mt, due to a record domestic crop. 2017/2018 imports estimated at 300,000mt based on large carryon stocks.

Corn Consumption: 2016/2017 consumption is forecast at 59 mmt due to low prices and an abundant crop. In July, the first corn-only ethanol plant is scheduled to open in Mato Grosso. The Minister of Agriculture recently praised the opening of the new plant and is encouraging more domestic consumption of corn in Mato Grosso via corn ethanol. The plant will have the capacity to produce 200 million liters of ethanol per year. Corn ethanol is currently less than one percent of total ethanol production. 2016/2017 consumption is expected to increase slightly to 59.5 mmt, on continued growth in the pork and poultry sectors.

Rice

Rice, Milled2015/20162016/20172017/2018
Market Begin YearApr 2016Apr 2017Apr 2017
BrazilUSDA OfficialNew PostUSDA OfficialNew PostUSDA OfficialNew Post
Area Harvested201020102000200021002100
Beginning Stocks641641261261321321
Milled Production721072108160816080008000
Rough Production106031060312000120001176511765
Milling Rate (.9999)680068006800680068006800
MY Imports857857600600600600
TY Imports771771600600600600
TY Imp. from U.S.000000
Total Supply870887089021902189218921
MY Exports547547800800700700
TY Exports641641800800700700
Consumption and Residual790079007900790079007900
Ending Stocks261261321321321321
Total Distribution870887089021902189218921
Yield (Rough) 5.27515.2751665.60245.6024

Rice Supplies: 2016/2017 milled rice production is estimated at 8.16 mmt, up 12 percent from the previous year on better yields. The harvest in most states finished in April and planting for the next crop will begin again in September or October. 2017/2018 milled production is forecast at 8 mmt. 2016/2017 stocks are forecast to increase slightly to 321,000 mt, of which 22,371 mt are currently held publicly.

Rice Trade: 2016/2017 imports are estimated at 600,000 mt, a 29 percent decrease, based on higher anticipated production. Brazil mainly imports from its Mercosul neighbors: Paraguay, Uruguay, and Argentina. 2016/2017 exports are estimated at 800,000 mt, up 31 percent from the previous year on a larger crop.

Rice Consumption: 2016/2017 consumption is expected remain steady at 7.9 mmt. Most Brazilians eat rice daily, but with more options for starches some are eating less rice, offsetting any consumption increases due to population growth.