South America Calling
Alastair Stewart South America Correspondent

Thursday 09/06/12

Brazil's Govt Bank Gives Boost To Winter Corn

Planting corn as a second crop after soybeans is no longer just a good way of covering soil. In recent years it has become a valuable source of revenue for Brazilian farmers.

Indeed, this year many farmers in the top winter-planting regions of Mato Grosso and Parana profess to have made as much money out of corn as summer soybeans.

But surging international prices are not the only reason that planting has grown dramatically. It is also because trading companies for the first time offered to buy large portions of the crop before planting, thus reducing the financial burden of planting corn -- so long the poor cousin of the ubiquitous soybean.

This week saw a further improvement in the marketing conditions for second-crop corn when Brazil's federally-run Banco do Brasil announced that it would offer a R$1 billion ($492 million) credit line with subsidized interest rates for the early acquisition of winter corn, cotton and sorghum inputs, including fertilizers, seeds and chemicals.

Farmers are keen to plant more second-crop corn next season -- earlier this week, Celeres, a local farm consultancy, forecast 2012-13 winter planted area would grow by 15% to 19.5 million acres -- and the new credit line may induce farmers to try to plant some more.

But early indications are that this season's weather may not be quite as conducive to winter corn as the past year when output rose around 60%.

The problem is that the El Nino weather phenomenon looks weak, which could push back soybean planting. That is not a disaster for the soybean crop, but it reduces the window for planting corn afterwards. As a result, some farmers may struggle to plant all they may wish to.

(CZ)

Posted at 11:16AM CDT 09/06/12 by Alastair Stewart
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