South America Calling

Brazil has started harvesting a record second corn crop and plans to place a lot of it on the international market.

Virtually perfect weather conditions over the last three months will allow Brazilian farmers to harvest over 52.5 million metric tons in June and July, up from 48 mmt in 2014, according to Andre Pessoa of Agroconsult, a local farm consultancy.

The excess will be exported, causing shipments to rise from 20.1 mmt in 2014 to 27.1 mmt in 2015, creating distance between Brazil, the world's No 2 exporter, and the Ukraine in third place.

"Brazil now has a ready market for its corn around the world," Pessoa told the annual BM&FBovespa agribusiness seminar in Sao Paulo.

He forecasts the majority of the extra export market will be stolen from the U.S.

Brazilian farmers have sold a large portion of the second corn crop, some 60% in the case of Mato Grosso, mainly for export, after multinationals entered aggressively into the market late last year.

This strategy of forward selling paid dividends this year with farmers selling before price slid in the first half of 2015. Combined with excellent yields, farmers in Sorriso, Mato Grosso, can expect to make some money with the help of government subsidies in 2015 for the first time in three years.

Agroconsult estimates farmers will earn R$271 per hectare ($35.50 per acre) in 2015 against a loss of R$99 per hectare last year.

The sharp jump in exports in August, September and October will put a strain on ports but they should be able to cope, said Pessoa.

Expansion of export capacity through northern ports will help in this, he noted.

Of course, most of the rest of Brazil's second crop will be consumed by the local poultry and pork industries, which are expanding and will consume an extra 2 to 2.5 mmt in 2015.

(CZ)

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