Brazilian corn sowings, production to fall back next season
Brazilian corn production will fall back sharply from the record levels seen this year, as farmers switch sowings away from corn in response to lower prices, US officials said.
Corn plantings for the 2016-17 season were supported by high domestic prices, after heavy imports and a disappointing harvest in the previous year reduced stocks.
But the market is expected to return to balance, after a record 2016-17 crop, the US Department of Agriculture's Brasilia bureau said.
As a result, end stocks are expected to jump by some 70% for 2016-17, reducing prices.
"Because of a glut of corn on the global market, prices will likely fall below the minimum government-set price when the second crop is harvest in June-July," the bureau said.
"This could possibly force the government to intervene with a stocks acquisition program which would further increase stocks, but reduce the price fluctuations seen in 2016."
Falling sowings, lower production
With supplies heavy, sowings for 2017-18 are expected to fall by 1.0m hectares, to 16.0m hectares, "as lower prices from this year's record crop incentivize farmers to switch to a more profitable crop".
And thanks to lower sowings, production is expected to fall by 8.0m tonnes, to 8.5m tonnes.
Exports are expected to fall 2.0m tonnes, to 28.0m tonnes, while import demand will be negligible, thanks to ample domestic supplies from the previous harvest, at 500,000 tonnes.
Brazil's agriculture segment will remain resilient, despite the so-called "weak flesh" scandal, which has closed down 21m meat processing plants due to allegations of bribery of inspectors.
"However, this shouldn't have an impact on feed over the coming year," the bureau said.
And with corn consumption edging up to 59.0m tonnes, thanks to the growing livestock sector, ending stocks are expected to fall 2.0m tonnes, to 9.14m tonnes.