Betting on production
A domestic production of 100 million tons of corn would already be possible without huge impacts on profitability. This is what agronomist
Thomé Luiz FreireGuth, fromConab, thinks. He recalls that poultry and hogs raising operations are equally likely to increase, and this will certainly
happen if the cereal is available at affordable prices. “Currently, although the cereal is available in themarket, there is a shortage of money for com-
mercialization”, says Abramilho executive president Alysson Paolinelli. The producers of animal protein need government support for purchasing
the cereal. “If the government does not come to grips with the situation, a bigger disaster is likely to happen”, he notes.
On the other hand, the corn growers should keepmore andmore focused on the fluctuations of the cereal in the Chicago Stock Exchange, as
well on future parities, seeking, whenever possible, to avoid future positions tomake sure their own crop is traded at prices that are remunerative,
besides covering the production costs. According to Guth, this phenomenon has been taking place for two crop years in a row, and is now begin-
ning tomaterialize in the 2016/17 growing season, with prices exceeding R$ 21 per 60 kg sack in NorthMato Grosso, in July and August 2017. For
this reason, it is of primordial importance for the meat producers to pay heed to this new commercialization systemof Brazilian corn.
Sílvio Ávila
30
T he time is now
There is plenty of stimulus for corn producers to sow a bigger crop in the coming
growing season, in light of possible higher prices and low stocks in early 2017
Brazil is likely to start the 2017 cropping
season with tight corn stocks and high prices.
This was the perspective in early July 2016, ex-
pressed by agronomist Luiz Freire Guth, mar-
ket analyst at the National Food Supply Agen-
cy (Conab). “This scenario stems from such
factors as the failure of the second corn crop
in the 2015/16 growing season, the strong
rhythm of exports and the high volume of an-
ticipated negotiations in 2016”, he explains.
According to him, as the harvest of the sec-
ond crop in the 2015/16 growing season was
coming to a close, the trend was for falling
prices limited to the export parity prices. “As a
result, the purchasers of the corn supply chain
(the animal production sector) should keep
focused on the right moment to acquire the
cereal in order to avoid the risk they took at the
beginning of 2016”, he observes. Formerminis-
ter Alysson Paolinelli, president of the Abramil-
ho,maintainsthattheclientsshouldtakeadvan-
tage of the second crop, also referred to as “big
crop”, to buy, because, on the contrary, the
kernels will be destined for exports.
Guthhas it that, as soonas shipmentswere
to start leaving the ports, corn supplies could
decrease. This reduction could be compensat-
ed by a possible bigger summer crop, in the
2016/17growing season.However, the chance
for the cereal to make strides could be limited
by the soybean crop, whose prices in the inter-
national scenario (Chicago Stock Exchange)
and at home are very remunerative. Accord-
ing to Paolinelli, prices would certainly react
simply because there would be no chance for
them to shrink, seeing that corn and soybean
are the twomost demanded cereals.
Domestic corn consumption is estimated
at 56 million tons, whilst exports had already
exceeded 30 million tons in 2015. There-
fore, the competition should continue very
tight, should Brazil fail to increase its crop.
Guth adds that Brazilian corn has become
very competitive in the international market,
mainly due to the advent of Arco do Norte
port regions – waterways in the North of the
Country. As a result, Brazil is in a position to
export even more corn.
