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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

07 November 2013

USDA GAIN: Brazil Grain and Feed UpdateUSDA GAIN: Brazil Grain and Feed Update

For 2012/2013, Brazilian wheat production has been revised upward to 4.38 mmt but remains over 24 percent below the 2011/2012 production level. To meet 2012/2013 domestic consumption - estimated at 10.74 mmt - Brazil has had to import 7.12 mmt, due to a severe production shortfall in Mercosul supplier countries, especially Argentina. This enabled U.S. wheat exporters to ship 2.0 mmt from January to September, the largest export volume to Brazil since 1978. For 2013/14, production is forecast at 4.77 mmt, almost 9 percent above 2012/2013 due to stronger prices. 2013/2014 imports are forecast at 7.7 mmt.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Record 2012/2013 corn production, estimated at 81 mmt, was negatively affected by a wholly inadequate infrastructure, low international prices, and a record U.S. harvest. Given the foregoing conditions, exporters - responsible for shipping an estimated 20 mmt - have incurred significant losses. For 2013/2014, corn production is forecast at 72 mmt due to lower prices.

Milled rice production for 2012/2013 is estimated at 7.99 mmt, up marginally from the previous year. The estimate is buoyed by new cold resistant varieties which are increasing yields in the state of Rio Grande de Sul, where 70 percent of Brazilian rice is grown. Milled rice production for 2013/2014 is forecast at 8.3 mmt and exports are placed at 850,000 metric tons.





Post adjusted 2012/2013 and 2013/2014 production numbers up to 4.38 million metric tons (mmt) and 4.77 mmt, respectively. Prices have been favorable for producers due to high demand for milling quality wheat. For 2012/2013 production, frosts and bad weather were responsible for output significantly lower than that of 2011/2012.


For 2012/2013 wheat imports are estimated at 7.12 mmt. Typically, Argentina supplies the vast majority of Brazil’s wheat imports, but a poor crop caused by bad weather and a restrictive export policy has resulted in a drop in Argentine exports and a dramatic jump in U.S. shipments (see charts below). To fill the gap created by the shortfall in Argentine wheat imports, Brazil reduced the Common External Tariff (TEC) for non-Mercosul countries to zero percent until the end of December 2013, which has allowed North American wheat to compete in the Brazilian market. The Brazilian Wheat Millers Association (ABITRIGO) wants the government to keep the TEC at zero percent through 2014, which would benefit U.S. exporters. While Brazil and the Russian Federation have a wheat protocol in place, it is doubtful that Brazil will import any Russian wheat due to quality, though there have been news reports of Brazilian pasta and cookie companies meeting with Turkish firms about importing Turkish flour.

For MY 2012/2013, Brazil imported approximately 2.1 mmt of non-Mercosul wheat, 2.0 mmt of which was from the United States. Exports for 2012/2013 are placed at 1.56 mmt. These exports are constituted of low-quality feed wheat.



2012/2013 record estimates for production remain unchanged at 81 mmt. Most analysts estimate the size of the crop between 81-82 mmt. Feed, seed, and industrial (FSI) consumption and feed use – mainly for poultry and swine – also remain unchanged.

In 2013/2014, corn will lose some acreage to more lucrative crops like cotton and soybeans and production is forecast to drop 11 percent to 22.0 mmt. First crop corn is forecast to lose area to soybeans, while second crop corn could lose area to cotton and wheat. In the state of Parana, winter wheat could be substituted for the second crop corn.


For 2012/2013, Post has reduced exports to 20 mmt, an 18 percent decrease. A record harvest in the United States has pushed global prices down. Prices are below cost for the Brazilian producers, and even with the minimum price guaranteed by the government of Brazil (GOB), growers are unable to make a profit due to high transport costs. It is not cost-effective for trucks to ship corn to the ports, competing logistically with soybeans. Instead, public and private stocks have increased while traders wait for the less expensive U.S. corn to be absorbed into the global market. Additionally, Sanitary and Phytosanitary (SPS) talks with China have yet to yield an agreement that would allow Brazil to export corn to the Chinese market. This and Brazil’s strained infrastructure are expected keep Brazil from exporting corn to China in 2013/2014. Regulations which govern port licensing are discouraging private investment in ports. The recent fire at the Copersucar warehouse in the Port of Santos could cause more delays for grains by increasing competition for export terminals, as the sugar that is usually exported out of the Copersucar terminal will need to find alternative outlets.


In light of low prices and logistical bottlenecks, some growers have called for the production of corn ethanol to utilize the abundant corn. The state of Mato Grosso is considering “flex” plants that could use both sugar cane and corn to produce biofuels. The GOB indicated that it would be willing to discuss supporting corn ethanol production. These “flex” plants could potentially absorb the growing stocks in 2013/2014. Other sources state that Brazil may use the United States as a model for corn ethanol production, but that would be several years out, as the infrastructure is not currently in place.



2012/2013 production is estimated at 7.99 mmt, up marginally from last year. Production for 2013/2014 is forecast at 8.3 mmt. New cold-resistant seed varieties are increasing yields in the state of Rio Grande de Sul, where 70 percent of Brazilian rice is grown.


In 2012/2013, Brazil shipped 93 thousand metric tons (tmt) of paddy rice to Venezuela, Nicaragua, and Costa Rica. The industry states that shipping paddy is not a priority and traders will fill market demands as necessary. Iraq recently announced that it will accept Brazil origin rice in its rice tenders and imported 29 tmt of Brazilian rice in 2012. For 2013/2014 rice exports are forecast at 1 mmt.


For 2012/2013 and 2013/2014, rice consumption is placed at 7.85 mmt and 7.9 mmt, respectively. Emerging middle class Brazilians in the South and Southeast regions of the country are increasingly turning to pastas and other wheat-based products, as they consider rice to be an inferior good. However, rice is still a staple food in Brazil’s North and Northeast regions, and demand from these regions is essentially maintaining overall consumption. Interestingly, the social welfare program “Bolsa Familia” is reducing rice consumption by altering eating habits. 7 percent of Brazilians receive benefits from “Bolsa Familia” through conditional cash transfers. With the additional money, recipients can afford more diversity in their diets, thus relying less on rice.

November 2013

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