COARSE GRAINS: WORLD MARKETS AND TRADE
Brazil Corn Series Revised: USDA has revised down its consumption series and raised its stock series beginning in 2001/02, based on official information released by government agency CONAB (Companhia Nacional de Abastecimento).
Because the 2004/05 harvest fell by 7 million tons to just 35 million tons, and based on the beginning stocks estimate of 4 million tons, government and private forecasters foresaw imports at 4 to 6 million tons and strong domestic prices. However, as the year progressed and prices remained low with very little import activity, it became evident that stocks were much higher than originally thought (See PDF version for chart).
CONAB has explained that the error was in overestimating feed consumption, particularly by the poultry sector. For example, the production cycle for broilers has been shortened by about one-third, leading to reduced feed consumption.
Forecasting stocks in Brazil is a challenge due to the large number of livestock and poultry operations as well as the difficulty in measuring stocks held by small producers. (A spreadsheet showing the changes can be found on the Grain and Feed website at http://www.fas.usda.gov/grain/circular/2006/01-01/graintoc.htm)
Domestic: December export bids for #2 yellow corn were up sharply by $7 to nearly $103/MT. December export bids for #2 yellow sorghum (Texas Gulf) were up over $3 to $96/MT. Prices strengthened because of higher barge rates and concerns over weather in South America. However, the increase was tempered by relatively weak export demand (See PDF version for chart).
TRADE CHANGES IN 2005/2006
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Last modified: Friday, February 10, 2006