Brazilian corn prices are expected to decrease in the first quarter of 2017 due to a large domestic surplus, the economic research centre of the University of São Paulo, Cepea, has announced.
After a production shortfall due to the unfavourable climate last year, specialists have forecast a record surge of 27.7 million tonnes for the 2016/17 season - an increase of 7.3% compared to the previous period.
Combining summer production figures with stock in transit, estimated by Brazilian crop supply agency Conab to be 7.98 million tonnes in January 2017, the domestic supply would be 35.7 million tonnes, or 63.7% of domestic consumption.
Considering the initial stocks for the year and total production of 83.8 million tonnes in the 2016-2017 harvest, domestic availability would be above 92.3 million tonnes, according to Conab. Of this amount, 56.1 million tonnes will be consumed internally. Consequently, the domestic surplus may surpass 36.2 million tonnes, the second largest internal corn surplus in Brazilian history.
The estimates are that 24 million tonnes of corn will be exported between February 2017 and January 2018. This scenario should be complemented by price adjustments, giving Brazilian producers a competitive advantage.
For the last 12 months, country producers have been struggling to keep up with the international market due to low prices in the Black Sea ($167/tonne) and in the United States ($159/tonne), compared to the $184/tonne Brazilian average.
The global production of corn for 2016/17 is expected to reach a record of 1.04 billion tonnes. The consumption worldwide is estimated to be around 1.03 billion tonnes, a 7% increase.
The United States Department of Agriculture indicated that Brazil will be the third largest corn exporter this season, behind Argentina and the United States.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Josiane Lang. To subscribe to ESM: The European Supermarket Magazine, click here.
