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Farmer hoarding lifts Brazil corn price - but wheat 'drops sharply'
By Mike Verdin - Published 08/09/2017

A hold-out by Brazilian corn farmers against selling, in the hope of higher prices, is meeting some success – contrasting with a decline in wheat values, weighed by boosts to supplies from buoyant imports as well as the nascent harvest.

Brazilian corn prices, Esalq/BM&F Bovespa index, on Wednesday stood at R$28.09 per 60 kilogramme bag, equivalent to about $151 a tonne, or roughly $3.75 per bushel.

That represented a rise of 9.0% month on month, and took values to their highest since mid-May, and comes despite increasing estimates for the newly-completed safrinha harvest.

Indeed, in Mato Grosso, the top corn-growing state, research institute Imea earlier this week raised its estimate for the state's safrinha crop to 30.45m tonnes – a 59% recovery from last year's drought-affected levels, and above the 27.44m-tonne the official Conab bureau has factored in.

'Unwillingness to trade'

However, prices have been supported by a reluctance among growers to accept prices which in late June dropped to R$25.49 per bag, a two-year low.

"Higher demand and growers' unwillingness to trade" have supported prices, according to Sao Paulo-based research institute Cepea noted.

"Brazilian purchasers and exporters increased their bidding prices in order to close trades," enabling the country's corn exports to reach a "firm" 5.26m tonnes last month.

Volumes need to average 4.4m tonnes for exports to reach the 28m tonnes that Conab has forecast for the year to the end of January 2018.

Imea underlined farmers' reluctance to sell, underlining that 73.0% of the Mato Grosso harvest had been sold as of early August – a figure down 21.8 points year on year.

Three-month low

By contrast, Brazilian wheat prices, as measured in the top growing state of Parana, stood at R$628.57 per tonne on Wednesday, down 8.4% month on month, and among their lower levels of the last three years, according to Cepea data.

On Tuesday, they set a three-month low of R$626.34 a tonne.

The weakness comes despite the prospect of the country's harvest falling 23% year on year to 5.20m tonnes, on Conab forecasts, a reflection of frost damage to the Parana crop, besides a 13.6% drop in sowings.

"A frost earlier in the growing season adversely impacted the [Parana] crop especially the early planted wheat that was flowering when the cold weather hit," said Dr Michael Cordonnier at Soybean and Corn Advisor.

"As a result, production estimates have been declining."

'Quotes dropped sharply'

The drop in wheat prices has been attributed in part to pressure from the accelerating harvest, now 16% complete in Parana, according to official state agricultural agency Deral.

"Wheat quotes dropped sharply in the domestic market in August, due to the beginning of harvesting activities," said Cepea.

"The entry of imported wheat into the Brazilian market… pressed down quotes as well," Cepea said.

Brazil – a structural importer of wheat, in particular of higher-grade grain to meet food needs – imported 656,000 tonnes of wheat last month, up 13.8% year on year, according to government data.

Conab last month raised by 168,500 tonnes, to 7.09m tonnes, its estimate of Brazilian wheat imports for the year to the end of July 2017, citing actual trade data.

The bureau forecasts 2017-18 imports at 7.00m tonnes.

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