Lower supply and higher demand boost domestic prices

Brazilian corn prices remain moving up and, in a short time, can reach the highest level in the domestic series. The current values are similar to that observed in October/November 2002 - end of the off-season period -, one of the highest in this decade.

The bases are: low volume of the grain in stock, sellers are not willing to trade, and buyers keep demand firm. It is important to consider that tradings instead are enough supplied.

Brazilian corn exports are reaching records this year, which have been reinforcing the limited stocks. According to Secex (Foreign Trade Secretariat), in October, the volume exported totaled 1.8 million tons, monthly record. In the year (January to October), the total was of 8.7 million tons. However, in November, the volume exported will be lower, but still superior to the November/2006.

Due to the restrict supply, buyers have been trading the grain offered in public (federal government) auctions. One alternative to consumer companies could be the imports. However, the international prices have been increasing, and, in the Argentina, the export tax has raised from 20 to 25 percent.

In the first fortnight of this month, the CEPEA/ESALQ Index (Campinas region - Sao Paulo state) valuated 6.7 percent in Real, averaging 31.08 reals or 17.92 dollars per bag of 60 kilos.

Regarding the next crop (2007/08 summer crop), the corn planted area in Brazil should enlarge 2.8 percent, however the productivity can be slightly inferior to the previous summer crop. Even though, the production could increase 2 percent, to 37.3 million tons - according to the Conab (National Company for Food Supply).

Even with the rains, Brazilian corn planting activities remain late over the previous crops. This scenario has been concerning growers and industries, since the supply is still uncertain for the 2007/08 season.



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