South America Calling

Brazil's Cereal Exporters Slash 2016 Corn Shipment View by 7 MMT

The Brazilian Cereal Exporters Association (ANEC) slashed its forecast for corn shipments by 7 million metric tons (mmt) due to heavy losses to the second crop.

Dry weather across the center-west region prompted the association to reduce its export number to 23 mmt for 2016.

"It has become clear that the losses are major," Sergio Mendes, ANEC's executive secretary, told DTN.

With a large portion of the second crop sold before planting, exporters are concerned about deliveries on contracts. But Mendes said the sector had faith that farmers would seek to do all that is necessary to honor commitments and renegotiate if needed.

Given the shortfall in production, Brazil will have to import more corn at the end of the year to feed its massive pork and poultry industry. While up to 700,000 mmt of corn is currently being imported from Argentina ahead of the second-crop harvest here, trading firms will likely look to the U.S. at the end of the year. However, there is potentially an issue as some of the varieties used in the U.S. have not been approved by Brazilian authorities.

SOY SHIPMENTS CONTINUE AT RECORD PACE

Meanwhile, soy shipments continued to run at a record pace in May.

According to ANEC, soybean shipments totaled 8.7 mmt last month, up 6.7% on the year before, and a record for the month.

The figures are lower than those released by the government, which estimated shipments of 9.9 mmt.

In the first five months of 2016, Brazil exported 32.3 mmt of soybeans, up 27.2% on the year before.

The fact shipments have been running at unprecedented rates all year is not only testament to strong demand but also to a significant expansion in Brazil's capacity.

The expansion of export routes through Brazil's north has significantly helped ease the strain on the rest of the infrastructure, notes ANEC's Mendes.

"When you expand north, you get a lot fewer trucks going south," he said.

But perhaps the most marked difference has been the increased efficiency of the southern ports.

New rules for programming shipments at Paranagua port have allowed it to add significant volumes and to reclaim its spot as No. 2 soybean exporter from Rio Grande, which itself has expanded storage capacity.

The improvement can be seen in the fact that Brazil shipped record volumes in one of the wettest Mays in recent history -- ship loading typically stops when there is rain.

Soybean line-ups indicate shipments may fall somewhat in June, but ANEC's Mendes does not expect an accentuated decline.

"We are still well on course for (soybean) exports of 57 mmt," he said. That would be up from 54 mmt last year.

(ES)

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