South America Calling

Brazil Works to Clear Way for US Corn Imports

Brazil's Agriculture Ministry is working to clear the way for imports of corn from the U.S. at the end of the year, said a top government official Thursday.

At present, various genetically modified corn events used in the U.S. are not approved in Brazil and therefore restricted here.

"We are planning to temporarily allow certain events to supply the (poultry and pork) industry," Neri Geller, executive secretary at the Agriculture Ministry, told journalists at the BM&FBovespa Agribusiness Perspectives seminar in Sao Paulo.

Domestic corn prices have shot up in recent months amid shortage concerns.

Brazilian farmers sold their second-crop corn aggressively for export at the end of last year, committing as much as 60% of the crop. Then a severe drought in April across the Center-West caused significant losses, prompting analysts to forecast output will be as much as 20% below initial expectations of around 60 million metric tons (mmt). And now severe frosts across the southern state of Parana during the weekend may have cut output more.

Speaking at the event, Geller chided local consumers for not competing with exporters for product last year when prices were at half current levels, saying that they simply had to become more attentive to futures markets.

"The age of rock-bottom prices for corn in Brazil are over. Brazil has become a major player on the export market now," he said.

Geller said the local consumers have reacted in recent weeks by buying out export contracts and the local prices have fallen in response.

Corn was quoted at R$29 per 60-kilogram bag ($3.53 per bushel) in Sorriso, center-north Mato Grosso, down 28% from one month ago.

Brazil has already imported around 600,000 metric tons (mt) of corn this year, basically from Argentina, and will still need to import more at the end of the year. Geller underlined that it would seek to facilitate those imports.

Geller said the government will do its part, selling the 500,000 mt that it has in stock.

The secretary surprised journalists by forecasting the grain planted area would rise by 5 million acres in the 2016-17 season. Early forecasts had indicated that Brazilian soybean area would stay flat next season, which begins in September, ending an eight-year run of substantial growth.

However, Geller said strong local prices for all grains would continue to stimulate expansion across the Cerrado and elsewhere.

Geller has been in the job two weeks following the suspension of President Dilma Rousseff following the start of impeachment proceedings.

However, he said the new administration's main aim will be to tear away bureaucracy that impedes the access to credit and investment in agribusiness.

(CZ)

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