Lower global supply supports prices in Brazil

Domestic corn prices keep moving up, even with the auctions promoted by Brazilian government. The main support comes from the lower crop production forecast by Conab (National Company for Food Supply). Besides that, the off-season period in Brazil and the slow pace of trades - growers retreat - gave support to the domestic values. The reduction of the North American crop production and the better corn demand - to produce ethanol - in that country are other reasons for the upward trend.

Between October 31st and November 16, the ESALQ/BM&F Index for corn (Campinas city, SP, area of consumption, trades between companies) moved up 5.43 percent, averaging 10.50 dollars per bag of 60 kilos this Thursday, Nov 16.

According to the last report published by Conab (Nov 9), Brazilian corn cultivated area should totalize between 9.28 and 9.50 million hectares, keeping close to the average of the last five years. In October, the forecast was of 9.39 to 9.55 million hectares. The crop production is forecast at between 32.92 and 33.60 million tons, increase from 3.5 to 5.6 percent in relation to the previous season.

The North American crop production (2006/07) should reduce from 277.00 to 272.93 million tons, according to the USDA (United States Department of Agriculture). In the United States, besides the lower crop production, the better demand for corn designated to the production of ethanol keep boosting the grain prices. The American demand of corn in the 2006/07 crop is forecast at 243.60 million tons, against 231.58 millions in the previous crop. Corn global production is forecast at 688.73 million tons, decreasing in relation to the two previous crops.



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