GIEWS Country Brief: Brazil 01-June-2020 – Brazil | Instant News


HIGHLIGHTS

  • Corn production in 2020 is anticipated at record levels due to large planting

  • Corn exports in 2020/21 are estimated to be far above the average level

  • Cereal prices are higher from year to year, driven by strong demand and a weak currency

Corn production in 2020 is anticipated at record levels due to large planting

The main season’s corn crop of 2020 is underway and production is officially anticipated at 75.9 million tons, 30 percent above the average of the previous five years. The expected bumper output is due to the highest planting area, mainly driven by high domestic prices and strong export demand. Large-scale planting more than offset the decline in annual output, influenced by rainfall deficits in the main producing countries Mato Grosso do Sul and ParanĂ¡. Aggregate corn production in 2020, including the recently harvested minor season crop, is estimated to reach a record high of 102.3 million tons, almost 20 percent above the average.

Rice harvest in 2020 is nearing completion and official production is estimated at 10.9 million tons, around 10 percent below average, reflecting a reduction in planting area. Rice sowing has continued to decline over the past 30 years as farmers turn to more profitable maize and soybean plants and they record their lowest levels in 2020.

Layer of wheat in 2020 is underway and the southern regions of the main producer are experiencing soil moisture deficits due to the below average rainfall since March. Official planting is estimated at a level close to average and slightly higher than the low level in the last two years, on the expectation of remunerative prices. However, if the rainfall deficit continues in the June-September period, as predicted by the weather forecast, germination and plant development are likely to be affected.

Corn exports in 2020/21 are estimated to be far above the average level

Corn exports, the main exportable cereals, in the marketing year 2020/21 (March / February) are estimated to be well above the average level of 35 million tons. The high level of exports reflects the large supply of the 2020 harvest and increased competitiveness in international markets due to a weak local currency. However, corn exports are expected to be lower than the record level in 2019 due to strong international competition caused by the decline in export prices by the United States. Rice exports in 2020 (January / December) are estimated to reach 870,000 tons, slightly above the five-year average.

Cereal prices are higher from year to year, driven by strong demand and a weak currency

The wholesale price of yellow corn fell from mid-April due to increased supply from the ongoing 2020 main harvest. Temporary demand from the ethanol industry amid the COVID-19 outbreak also pressured prices. However, they are on average 50 percent higher compared to May 2019, reflecting strong demand by the domestic feed sector and for exports, supported by a weaker currency.

Rice prices fell sharply in May 2020, reflecting an increase in supply from the 2020 rice harvest and weakening domestic demand which increased in March and April amid a COVID-19 pandemic. In May, rice prices were around 8 percent higher YoY.

The price of wheat, which has continued to increase since the end of 2019, increased further in May and is about 33 percent higher than the previous year. This increase mainly reflects low seasonal availability and prices are expected to rise until the new harvest in August.

COVID – 19 and steps adopted by the Government

In an effort to stop the spread of the COVID-19 outbreak, locking measures were carried out in mid-March in a number of states and cities, including Rio de Janeiro, Rio Grande do Sul and Sao Paolo. All productive and commercial activities, including cross-border trade, along the food supply chain have been exempt from action.

The government cut its annual benchmark interest rate to an all-time low of 3 percent to reduce the negative impact of the COVID-19 pandemic on the domestic economy. The Ministry has guaranteed sustainable purchases of food from small farmers to supply school canteens, where they remain operational. Conversely, when the school banquet program is disrupted, monthly subsidies of BRL 55-60 (around USD 10-11) are given to vulnerable households from April to the reopening of schools.



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