Three factors have been impacting corn prices in Brazil since the beginning of April: the projection of the 2007/08 crop enlargement area in the U.S, which downed grain prices at the Chicago Mercantile Exchange (CBOT), the valuation of the Real against the dollar, diminishing the export parity price in reals, and the National Company for Food Supply (Conab - Brazilian government) forecast, which indicates higher production on both the summer and winter crops in Brazil.
The CEPEA/ESALQ Index (Campinas region) devaluated 2.75 percent in Real and 4 percent in dollar during the first fortnight of April, closing at 19.17 reals or 9.41 dollars per bag on Monday, April 16th.
The new Conab forecast confirms the expectation of higher winter corn crop production. It is forecast 4,094.1 thousand hectares - a record. The winter production is predicted at 14.4 million tons.
This way, the total Brazilian corn production is forecast at 51.05 million tons. From now on, the Brazilian production depends only on weather conditions, because planting activities are almost finished. The decision made by the domestic growers was based on high prices in the foreign market.
Until the end of April, more than 60 percent of the summer crop corn production should be harvested in Brazil. The winter crop depends now on the weather, especially on rains in the Center-Southerner region.