South America Calling
Alastair Stewart South America Correspondent

Tuesday 09/11/12

Brazil Corn Export Expectations Raised

Record August exports, a massive port line-up and heavy export commitments through November prompted Safras e Mercado, a respected local farm consultancy, to this week raise its corn export forecast for the 2012-13 marketing season (Feb-Jan) by 1.6 million metric tons (mmt) to 17. 1 mmt.

And with demand sky high and logistical impediments receding, shipments could actually hit 20 mmt, according Paulo Molinari, Safras e Mercado's corn specialist.

"I think the 17 mmt number is conservative. There's every chance shipments will remain at August levels, which will take us to 18, 19 or 20 mmt this season," he said.

Brazil shipped 2.7 mmt last month, outstripping the previous single-month record of 1.9 mmt, and September exports could be higher with ships booked to pick up 3.5 mmt from port.

Sales for October and November are also strong, while the bottlenecks at Brazil's ports will ease with the decline of shipments of rival commodities, soybean and sugar, and an apparent end to the various truck and port strikes that dogged exporters in July and August.

"Corn exporters will have the bulk terminals to themselves in the last five months of the season and that will help greatly, as will the end of the strikes," notes Molinari.

He says the question remains how much corn will be sold for shipment in December and principally January.

"Business for January is slow, but all it takes is another run-up in prices for business to start again," said the analyst.

After all, with a bumper soybean crop of over 80 mmt expected next year, cooperatives and farms will want to clear the silos of corn before February.

Brazil has been a regular corn exporter for some years but has stepped up shipments this year amid a bumper second crop and losses in the U.S. and Argentina.

The previous export record of 10.9 mmt was always going to be topped this year, but there were doubts about by how much after shipments failed to accelerate in June and July. However, there were punctual reasons for the slow start to the export season, says Molinari.

Firstly, farmers miscalculated and oversold corn for June delivery. They simply couldn't harvest quickly enough to meet these early-season obligations, despite perfect crop conditions.

Secondly, in July and August, there was rain, all manner of strikes by truckers, health inspectors and port workers and a shortage of trucks to transport the bumper winter harvest.

The result was an overflow of 1 mmt into the September corn line-ups.

But with the post-harvest squeeze coming to an end, shipments are running more smoothly. That means Brazil will be able to export the 2.5 mmt per month from now on and can easily hit 17 mmt, says Molinari.

Posted at 12:36PM CDT 09/11/12 by Alastair Stewart
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