South America Calling

Brazil Sees Domestic Corn Demand Slip On Sky-High Prices

Brazilian corn consumption will likely be one million metric tons (mmt) lower than forecast in 2016 due a slowdown in poultry and pork production.

Corn demand will be 3% lower than expected at 32.4 mmt after a surge in domestic prices, said the Brazilian Animal Protein Association (ABPA).

Brazilian corn prices have hit record levels in June and July amid aggressive exporting and second crop losses in Mato Grosso and surrounds.

"After the slowdown in chicken and pork production ... There was a reduction in pressure on the corn supply scenario from both sectors in the second half of the year," said ABPA in statement.

According to Francisco Turra, ABPA president, corn availability has been aided by the ready flow of Argentine and Paraguayan grain in recent months.

But the association, which counts among its members international heavy hitters like JBS and BRF, reaffirmed that Brazil will still need U.S. corn at the end of the year and underlined the importance that those imports are soon approved by authorities.

The Brazilian government has lifted tariffs on North American corn but it cannot yet be imported until key GMO strains commonly used in the U.S. are approved here. The Agriculture Ministry is seeking emergency approval but a decision on three strains has been put back until the first week of October.

"(With the import of U.S. corn), the scarcity that we experienced in the first half should not be repeated," said Francisco Turra, president of ABPA.

According to ABPA, chicken production will total 13.5 mmt in 2016, down 4% from original estimates, while pork output will reach 3.64 mmt, down 3.2% on earlier forecasts.

Alastair Stewart can be reached at Alastair.stewart@dtn.com

(ES)

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