Aug 18 (Reuters) –

• Neri Geller, secretary of farm policy at the Agriculture Ministry, said on Thursday that he thought that Brazil’s 2016/17 corn output would reach 84 mln tns due to increased planting in Parana state

• Brazil suffered severe losses to its larger winter corn crop due to poor rains earlier in 2016, driving prices on the domestic market to record highs
• Prices have since pulled back from highs but remain nearly twice the prices registered at this time last year
• Brazil’s crop supply agency Conab forecast the current corn crop at 68.48 mln tns, down 19 pct from a year ago

SAO PAULO, Aug 9 (Reuters) – Brazil’s government cut its 2016 winter corn crop forecast by 1.1 percent to 42.59 million tonnes on Tuesday from 43.05 million tonnes in July as evidence of drought continues to weigh on the final harvest numbers.

In its 11th forecast of the season, crop supply agency Conab said it expected Brazil’s total corn output, including the summer harvest, to be 68.48 million tonnes, down from July’s 69.14 million and last year’s 84.67 million. Exports of corn this year will fall to 20 million tonnes from 30.17 million last year, it said.

Conab raised its forecast for area planted for winter corn, the bigger of the two crops, to 10.53 million hectares (26 million acres) from 10.13 million hectares in July.

But irregular rainfall in the main winter corn-producing regions of the center-west grain belt continues to push yield numbers lower. Productivity fell to 4.05 tonnes per hectare from 4.17 in July’s estimate, Conab said.

Brazil has been importing corn from Argentina and Paraguay to make up for the shortfall in output and supply feed to its struggling pork and poultry industries.

Brazil’s restrictions on certain genetically modified varieties of corn have held up imports from the United States. Agriculture Minister Blairo Maggi said in recent days, however, that he was working on a solution to secure clearance for North American corn to try to bring down stubbornly high local prices.

20:43 GMT, Tuesday, 2^nd Aug 2016, by William Clarke (Agrimoney.com)

Corn futures tumbled to six-year lows – only to recover on the news that the Brazilian government is working to open up its livestock feed sector to genetically modified corn from the US.

Corn had a weak start to the session, after weekly US Department of Agriculture overnight reported better-than-expected US crop ratings.

The USDA saw corn condition at 76% good or excellent, despite the hot weather, where markets were expecting at 1 point drop in condition.

And the development of corn is well advanced, having got through the crucial month of July with no severe heat damage, with 91% of corn in the silking stage.

Favourable crop outlook.

Meteorologist Gail Martell said the good crop condition, and a benign weather outlook “points to a favourable corn harvest in the making.

“Summer growing conditions in corn have been mostly favourable, though not ideal.

“Rainfall has been ample, promoting strong growth and development in corn,” she said, although some periods of heat have “proved detrimental”.

But the warm June temperatures, along with ample rainfall, “has spurred corn development,” Ms Martell said.

The prospect of ample US supply pushed December corn futures to session lows of just $3.29 a bushel, the lowest level for second-month futures since late 2009, but prices pared losses later in the session.

Brazilian demand

Rich Nelson, at the US broker Allendale, ascribed the change in mood to “a new story out there”.

This was an announcement by the Brazilian government that it was working to allow the import of more varieties of genetically modified US corn, for use in the country’s livestock industry.

Shipping corn to Brazil, the world’s second ranked corn exporter, during the middle of its’ second crop, or safrinha, harvest might seem like sending coals to Newcastle.

But a crisis in corn supplies is developing in Brazil’s southern livestock regions, sending prices soaring.

A long period during which the currency was very weak, making Brazilian corn highly competitive in international markets, lead to heavy exports.

Brazilian stocks were depleted, and much of the current crop was forward sold.

Now, with estimates of the safrinha crop ever declining, the corn supply is getting very tight.

Running out of corn

Last week the analyst Dr Michael Cordonnier reported that “livestock producers are very concerned that the corn situation in Brazil is so tight that the country could essentially run out of corn again before the 2017 safrinha corn harvest gets underway next June”.

“Even though the corn situation is expected to get very tight in Brazil, the country is still exporting corn, but all the corn now being exported is to fulfil old contracts from months ago,” Dr Cordonneir said.

“Once these contracts are fulfilled, no new export contracts are expected for the foreseeable future because domestic corn prices in Brazil are expected to be much higher than the international price.”

Domestic demand

“They do have a need for corn domestically,” Mr Nelson told Agrimoney,.”The country’s exporters oversold.”

He noted ideas that export sales could be made within the next few week.

But he pointed out that it was “interesting that they’re making such a move on a government basis now,” rather than ahead of the safrinha crop, when supplies were tighter.

December corn futures bounced back from the session lows, to finish the day unchanged, at $3.34 a bushel.

Export prospects limit losses

Soybean futures couldn’t make any such recovery, although they did trim losses on good export potential.

Soybeans were rated 72% good or excellent in the USDA report.

This is actually a 1 point increase from last week, where a 1 point decline was expected.

Still, at least there was a touch of export demand, as the USDA announced a 252,000 tonnes ale of soybeans to China, for delivery next marketing year.

And the dollar declined through the session, supporting dollar-denominated prices, and increasing export prospects, falling 0.7% against a basket of currencies, to a five-week low.

November soybean futures finished the day down 0.9%, at $9.53 a bushel, falling below the 200-day moving average for the first time since April of this year, but 10 cents above the session low.

Wheat extends losses to 10-year low

But Chicago wheat markets plumbed a fresh 10-year low, under pressure from the weight of world supplies.

Adding to the bearish tone was the news out overnight that Japan and Korea had both taken steps to restrict US imports, due to concerns over unapproved genetically modified wheat verities.

And Gasc, the stat grain buyer for Egypt, appears to have curtailed its buying in Tuesday’s tender, taking just one 60,000 tonne cargo, of Russian wheat.

This is the smallest purchase of the marketing year.

Gasc bought 60,000 tonnes of Russian wheat from Midgulf at $168.90 a tonne, after many sellers lifted their prices from last week.

September Chicago wheat futures finished down 1.1%, at $4.01 ј a bushel, its lowest level since September 2006.

SAO PAULO, June 6 (Reuters) – Early harvested corn hitting Brazil’s grain markets is lowering record high prices, which have hurt the country’s massive poultry and pork industries, specialists said on Monday.

Despite the small size of the lots coming early from the fields of Mato Grosso and Parana, Brazil’s biggest producer states of the grain, their arrival has driven down the stratospheric prices seen over the past months in the near absence of the main animal feeds ingredient on the spot market.

A few weeks ago, corn was quoted, though hardly sold, at 50 reais ($14.33) a 60-kg bag in Mato Grosso. Prices have already dropped to between 32 reais and 40 reais.

“The price is becoming real again … The liquidity has come back … These absurd values of the past months were only possible because of the lack of liquidity,” said Daniel Latorraca, the superintendent of Mato Grosso’s Farm Economics Institute.

He added that supplies of early arrivals of corn would not increase much in the next week, as harvest was still sporadic and nascent. But harvest is expected to pick up by the end of June.

Farmers most likely sped up some early harvesting of fields that were ready to capture some of the record high prices on the physical market.

Even at between 32 reais and 40 reais, corn prices are still two to three times what they were last year at this time, and the country’s meat industry is downsizing to limit losses stemming from high feed costs. (Full Story)

By the end of last week, farmers had harvested 3 percent of Mato Grosso’s corn crop.

“It’s very little corn yet, but it gives an indication, and people realize there is physical corn again and turn off the speculative element,” said Ricardo Santin, vice president of Brazil’s Animal Protein Association.

He said some producers in Sao Paulo were buying corn at 30 reais a bag in Mato Grosso and bringing it back to the state for a total cost of 40 reais per bag when freight costs were added, which is still better than the 50 reais per bag last week.

Santin said the corn harvest in Parana, Brazil’s No. 2 producer state of the grain, would also pick up by the end of June. He also said that the corn crop from Paraguay would be coming online in the next weeks.

“The peak of speculation is over. Time will only work against the guy that was holding corn,” Santin said.

The Brazilian farming prices research center Cepea ESQ/CORN/ANALYSP said that sellers of corn were appearing on the spot market in greater number to capture attractive prices in the past week.

By the end of June 2015, only 10 percent of the country’s winter corn crop had been harvested.

Edmar Gervasio, a corn specialist at Parana state’s agriculture secretariat, said the harvest will pick up speed at the end of June in the state, but he dismissed expectations that prices would fully recover to normal levels soon.

Prices for corn began to reach record levels in April when drought started to hurt Mato Grosso’s winter corn crop, which would have not been so bad had it not been for record exports of the grain over the previous year because of the sharp drop in the local currency.

“I don’t see a lot of space (to a return to normal prices) because we are talking about Brazil as a whole, which has suffered a loss in production of corn (due to drought),” Gervasio said.

• Pork and poultry industry slashes capacity 15 pct -ABPA
• Industry’s recent expansion runs into corn shortage, demand drop
• Brazil’s No. 3 processor Aurora to cut capacity 8-16 pct
• Brazil economy in worst downturn since 1930

By Reese Ewing

SAO PAULO, June 3 (Reuters) – Stubbornly record-high corn prices in Brazil, the world’s No. 2 exporter of the grain, are compelling pork producers to slaughter sows they cannot afford to feed and poultry processors to close plants.

Southern states that are the traditional home to pork and poultry plants have been hardest hit by soaring corn feed prices and a plunge in demand for meat, with companies closing at least three slaughter houses to cut supply, said Francisco Turra, president of Brazil’s Animal Protein Association (ABPA).

As much as 15 percent of pork and poultry processing capacity has shut in the world’s top poultry exporter and fourth-largest pork exporter, he estimated. That is equal to 225,000 tonnes of monthly meat production.

Pain across the massive meat industry, which is laying off workers and losing money, will deepen the stricken government’s woes as the economy suffers its worst downturn since 1930.

“The price of drumsticks in the supermarket is 5 reais ($1.40) a kilogram: that barely pays for water to produce the meat,” Mario Lanznaster, president of Brazil’s No. 3 pork and poultry processor Aurora Alimentos, said on Wednesday, estimating that minimum production costs were 50 percent higher.

The company will reduce output by 8 percent by furloughing one shift by August at its Abelardo Luz plant in Santa Catarina and will shut the entire unit’s operations in September if conditions do not improve.

The world’s top beef exporter JBS SA JBSS3.SA and the biggest poultry exporter BRF SA BRFS3.SA have raised local prices for the second time this year to try to offset rising feed costs. But this is only weakening demand in the severe recession.

Brazil produces 1.2 million tonnes of chicken meat a month, most of which is consumed at home. It slaughters 3 million pigs a month, less than half of which are exported.

BLEEDING CASH

Brazil’s hog and chicken processors have been bleeding cash for months as an unexpected domestic shortage in corn pushed local prices to record highs. As the real BRL= collapsed against the dollar last year, merchants and exporters sold record amounts of the grain abroad, leaving local industry facing stratospheric prices for feed. (Full Story)

In April, the government eased restrictions on corn imports to help meet domestic demand, but prices MAZ-PIDX-BRL remain above 53 reais ($14.70) a bag, even as the global market surplus swells and international prices are under pressure.

The pain for the industry is becoming more acute as they struggle to pass on the extra costs to consumers.

Some pork producers in Mato Grosso in center-west Brazil are culling their reproductive sows, said Alexandre Possebon, the state deputy farm secretary.

At around 315 reais a carcass, they are losing 10-20 reais ($2.8 – $5.6) per animal they raise to maturity, he said.

The national pork producers’ association in Brasilia said farmers were reducing insemination of pigs by 10 to 15 percent.

While cutting hog breeding rates and culling sows is typical during downturns in demand, this is turning out to be the most severe contraction for Brazil’s livestock industry since the world economic crisis in 2008.

The steps are intended to tighten local meat supplies and boost retail prices, which may slow the central bank’s hopes to lower interest rates later in the year. Pork production costs are at record highs. Feed, made up mostly of corn, accounts for roughly 70 percent of production costs.

COSTLY CORN

Averama Alimentos, which slaughters 280,000 birds a day at its two plants, said record-high prices for the grain forced it to close its larger operation in Umuarama in southern Brazil with the loss of 1,500 jobs.

Banks had already withdrawn credit lines last year amid the political crisis and recession that deflated domestic demand.

Companies, as well as farmers, are now counting on relief when the second of two annual corn crops arrives in the coming weeks. But dry weather has hurt yields, raising concerns that feed costs could remain high until early 2017.

“It’s going to take a while for prices to come down,” said Fernando Iglesias, meats specialist at analysts Safras e Mercado. ($1 = 3.60 reais)