USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed
02 April 2012
USDA GAIN: Brazil Grain and Feed Annual Report 2012
2012/13 corn production is forecast at a record 68 million metric tons (mmt), with exports placed at
12.5mmt. 2012/13 wheat and rough rice production are forecast to recover planted area lost to
production in 2011/12 and to reach 6.1mmt and 13.5mmt, respectively. 2011/12 rice exports are
forecast at 900 thousand metric tons (tmt). U.S. wheat exports in 2011/12 are estimated to reach
700tmt, the second highest level on record. With the 2011/12 rice prices and trade environment, rice
exports are projected at 700tmt without the support of government programs.WHEAT
2011/2012 Wheat Supplies: Wheat production is placed at 5.7mmt. The slight decrease in
production reflects the area loss to second-crop corn planting. Wheat production area is estimated at
2 million hectares, a seven percent decrease from 2010/11. Wheat production, mostly concentrated
in the three southern-most states of Paraná, Santa Catarina and Rio Grande do Sul, is shifting further
south. Paraná, long the lead producer of Brazilian wheat, is expected to undergo a wheat production
shift from the northern and western to the central and southeast regions of the state. Paraná is
expected to lose some area planted to wheat as more producers shift to second-crop corn. Santa
Catarina and Rio Grande do Sul are expected to gain more area harvested to wheat, offsetting the
area loss in Paraná.
2011/2012 Wheat Consumption: Wheat consumption is projected at 11.3 mmt. The almost five
percent increase from 2010/11 has three primary influencing factors: stable (albeit low) population
growth (incorporating nascent immigration trends from neighboring countries), increasing usage of
wheat feed, and wheat-product consumption rates that mirror the growth in the middle class
(particularly Brazil’s income classes C and D). Bread production accounts for approximately 55
percent of wheat consumption: loaf bread consumption is slowly taking market share away from the
consumption of French bread, long the local staple. Pasta accounts for approximately 15 percent of
wheat consumption. Pastries and other niche products also account for 15 percent of wheat use.
Feed is expected to account for ten percent of the wheat consumption, a 300 percent growth from
2010/11—a growth which government support programs have facilitated. It is expected that millers
will be able to source more domestic wheat from Rio Grande do Sul as wheat quality there continues
to improve due to better weather patterns and particularly through better seed.
2011/2012 Wheat Trade: Brazil’s wheat imports are estimated at 7.1 mmt in 2011/12, a six percent
increase from 2010/11, and slightly higher than USDA’s March estimate due to expected
consumption growth. Imports of U.S.-origin hard winter wheat are estimated at 700tmt, the second
highest level on record. Brazil historically has produced enough wheat to meet only half of its
consumption needs. Given logistical advantages and tariff exemptions, Mercosul members
(Argentina, Uruguay and Paraguay) typically account for 98 percent of Brazil’s wheat imports. The
United States has been the primary back-up supplier in years when Mercosul cannot meet Brazil’s
import needs. U.S. wheat typically enters Brazil to supply millers in the Northeast, where it can
compete due a waiver on the merchant-marine tax. U.S. wheat is favored by Brazilian millers due to
its superior quality that allows for blending with domestic wheat to achieve the varied quality traits
demanded by the industry. While Mercosul wheat production is anticipated at normal levels,
Argentina, and to a lesser degree, Paraguay, are expected to export more wheat to markets other than
Brazil.
Wheat exports are estimated at 1.8 mmt. 2010/11 wheat exports were a record high, and 2011/12
exports, while 29 percent lower from the year before, are estimated to reach the second-highest level
on record. Wheat exports will continue to be strengthened by Brazilian government support through
the Premium for Product Outflow Program (PEP).
Flour imports from Argentina, estimated at 810 tmt, are expected to continue growing. This remains
a contentious issue between the Brazilian industry and the Brazilian government.
2012/13 Wheat Supplies: Wheat production area is forecast at 2.2 million hectares, a nine percent
increase from 2011/12. Wheat area is forecast to recover some land from soybeans in Rio Grande do
Sul and Santa Catarina. Wheat production is forecast to continue its shift further south and it is
expected that Rio Grande do Sul will overtake Paraná to become the largest wheat producing state.
Wheat production is forecast at 6.1mmt, a seven percent increase over 2011/12. Domestic wheat
should continue to improve in quality for two reasons: (1) the production area shifts to the South
should provide a more conducive growing climate, (2) Post anticipates that Brazil’s new flour
standards will enter into force. The new flour standards call for better wheat characteristics,
encouraging producers to invest in better seeds. Currently, the standard is scheduled to enter into
force in July 2012. However, as the new standard remains an ongoing discussion among producers,
millers and the government, it is likely that the standard implementation will be postponed for a third
and final time to 2013.
2012/13 Wheat Consumption: Wheat consumption is forecast at 11.4 mmt, a slight increase from
2011/12. There are no major alterations anticipated to current consumption trends. Feed wheat is
forecast to continue at 600 tmt, assuming that PEP will still influence market decisions and
transactions. Corn prices have become the floor for wheat prices. When wheat prices reach this
floor, livestock producers will have the possibility to alternate between feed sources.
2012/13 Wheat Trade: Wheat imports are forecast at 7mmt and exports are forecast at 1.5mmt, one
and 20 percent decreases, respectively, from 2011/12. U.S. wheat exports to Brazil are forecast at
400 tmt. These forecasts are all predicated on a return to Mercosul countries supplying the bulk of
Brazil’s import needs, as opposed to the unusual trade scenario of 2011/12.
Brazil Wheat Imports
Brazil Wheat Imports HTS 100110 and 100190 Wheat, Group 60 (2007) | |||
---|---|---|---|
Partner Country | Quantity (Unit: 1,000 mt) | ||
2009 | 2010 | 2011 | |
World | 5,445.60 | 6,323.21 | 5,740.45 |
Argentina | 3,215.31 | 3,620.68 | 4,546.38 |
Uruguay | 862.98 | 1,163.60 | 686.49 |
Paraguay | 820.66 | 635.00 | 363.82 |
United States | 218.15 | 494.01 | 104.25 |
Canada | 302.32 | 371.11 | 39.49 |
Lebanon | 0.03 | 0.04 | 0.03 |
Angola | 0.00 | 10.00 | 0.00 |
France | 0.00 | 0.04 | 0.00 |
Poland | 26.16 | 0.00 | 0.00 |
Russia | 0.00 | 28.72 | 0.00 |
Source : Secretaria de Comércio Exterior |
CORN
2011/2012 Corn Supplies: Corn production area is estimated at 14.3 million hectares, a three
percent increase from 2010/11 but a seven percent decrease from USDA’s official 2011/12 estimate.
The corn area lost to the December-January drought in the South (particularly the estimated 20
percent corn loss in Paraná’s first-crop corn) led to lower estimates. Corn production is held steady
at 62mmt. These numbers already reflect the corn losses from the drought. Second-crop corn
planting has gone very well throughout the country. The second-crop corn was planted in the ideal
period of time (the optimal planting window is between mid-December and mid-March, depending
on the region of the country) and has had propitious levels of precipitation. The window for secondcrop
corn in Mato Grosso closed at the end of February and in Paraná in mid-March. Second-corn
crop yields will be contingent on two factors: (1) the continuation of rain to the grain filling phase,
(2) the absence of frost events in Paraná.
Producers throughout the country have experienced a shortage of high-quality seed for second-crop
corn. The lack of advance planning, coupled with strong international prices, led to a larger-thanunexpected
first-crop corn planting that utilized some of the seed supply that had been purchased for
second-crop corn. Despite these reports, second-crop corn planting appears to have gone smoothly.
The shortage of high-quality seed may have an impact on final yields.
2011/2012 Corn Consumption: Corn consumption is placed at 52mmt, in line with USDA official
estimates. Feed is estimated at 44.5mmt. Corn feed use is expected to have the following
consumption break-down among major livestock categories: poultry at 26mmt (58 percent), swine at
14mmt (31 percent), and cattle at 4mmt (9 percent).
2011/2012 Corn Trade: Corn imports are placed at 800tmt and exports at 10.5mmt, in line with
USDA official estimates. Strong international prices continue to make corn exports not only feasible but also desirable for both Brazilian producers and traders. Imports continue to come mostly from
Paraguay to meet domestic needs. Iran, Taiwan, and northern Africa continue to be the largest
export markets for Brazilian corn. (See Table 2.2) The December-January drought in Latin America
caused greater corn loss in Argentina than in Brazil. Brazil will probably avail itself of this enhanced
export window opportunity.
The Iran Factor: Iran continues to be by far Brazil’s largest corn export market. According to
Brazil’s export statistics, Brazil’s CY2011 corn exports to Iran were estimated at 1.9mmt, a 27
percent increase from 2010. Brazil’s first quarter 2012 exports to Iran have been strong.
Brazil Corn Exports to Iran

2012/13 Corn Supplies: Corn production area is forecast at 16 million hectares, a 12 percent
increase from the 2011/12 production area (though only a six percent increase in planted area—since
6 percent of the 2011/12 planted area was abandoned due to the drought). Post forecasts that the
first-crop corn production area will remain constant and that overall 2012/13 area gains will come
from increased second-crop corn production. In essence, half of that 12 percent increase corresponds
to the recovery of the corn area lost to the drought; the remaining 6 percent growth will come from
increased second-crop corn production, particularly in the states of Mato Grosso, Goiás, and Paraná.
While impossible to forecast, the La Niña phenomenon is predicted by many analysts to have a net
positive impact on the 2012/13 corn crop.
While consensus exists among analysts that second-crop corn will increase its production area, there
is a lack of consensus on first-crop corn production area. Some analysts believe that international
corn prices will dictate (perhaps at the last minute) whether 2011/12 first-crop corn area gains
(mostly in the South from former soybean-producing regions) will continue for first-crop corn
production or return to soybean production in 2012/13.
The sustained advances in shorter maturation soybean varieties will continue to increase the planting
of second-crop corn in the appropriate window in 2012/13 and beyond. In this manner, these
varieties with shorter maturation rates will strengthen second-crop corn yields.
2012/13 Corn Consumption: Corn consumption is forecast at 55.5mmt, a seven percent increase
from 2011/12. An anticipated increase in animal feed and industrial use (corn syrup) are responsible
for the forecast growth in corn consumption. Feed usage is forecast at 47.5mmt, a seven percent
increase from 2011/12. Corn feed consumption is forecast to increase for expanding poultry, swine,
and bovine production. Poultry operations are forecast to continue expanding at three percent,
particularly for domestic market consumption. Swine production is also forecast to expand, since
China recently visited Brazil to double the number of swine facilities approved to export to China.
With 42 swine facilities now approved for export to China, a forecast increase in swine production of
five percent would raise the 2012/13 corn feed demand. Corn feed demand is also forecast to
increase to meet the needs of cattle finishing, via feedlots. Feedlot use is limited in Brazil, as 90
percent of Brazilian cattle are sold directly from pasture to slaughterhouse, but feedlot use is forecast
to continue its gradual increase. Industrial corn use is forecast to increase to meet the growing
domestic demand for corn syrup. Market trends strongly suggest that the growing middle class will
increase its consumption of processed products (including both foods and beverages), requiring
larger quantities of corn syrup.
2012/13 Corn Trade: Corn imports are forecast to hold steady at 800tmt and corn exports are
forecast at 12.5mmt, a 19 percent growth from 2011/12. With Paraguay as the primary supplier, corn
imports are expected to continue their role of meeting discrete local consumption needs. Forecast
record corn exports at 12.5mmt are predicated on record corn production of 68mmt. Corn exports
are forecast to grow for three reasons: (1) a domestic corn surplus as production growth is forecast to
outstrip consumption growth, (2) continued attractive international commodity prices, and (3)
increasing international demand. Export markets are forecast to remain the same as in years past,
with the possible exceptions of China which could begin to import Brazilian corn and Iran which
could be impacted by politically-influenced market irregularities.
RICE, MILLED
2011/2012 Rice Supplies: Rice production area is estimated at 2.55 million hectares, a ten percent
decrease from 2010/11. The decreased production area is a result of the 2010/11 oversupply and
subsequent low prices. Every rice-producing state in the country decreased production area or held
steady from 2010/11. The appeal of soybean production has attracted some traditional rice
producers, but for many growers rice may remain the only crop choice available due to climactic
conditions. Rough rice production is placed at 11.765mmt, a 14 percent decrease from 2010/11.
Factors contributing to the decreased production are the reduction in planted area and yield losses
due to the December-January drought, which particularly impacted Southern Brazil. Southern Brazil
accounts for 47 percent of the national rice production area but is responsible for 80 percent of the
rice production, due to irrigation practices. The rice production area in Santa Catarina surpassed
Mato Grosso, making it now the state with the third-largest amount of rice production area, behind
Rio Grande do Sul and Maranhão (a state with extensive dry-land production areas but low
productivity). Seed varieties most used in the South were IRGA417 and BR IRGA409, developed
by the Rio Grande Rice Institute (IRGA). As of mid-March, the rice harvest is 35 percent complete,
with the harvest anticipated to conclude in May.
2011/2012 Rice Consumption: Rice consumption is estimated to hold steady and in line with USDA
official estimates at 8.1mmt, though a three percent decrease from 2010/11. The 2010/11 oversupply
of rice led to the increased use of rice for feed, a phenomenon that will not be repeated to such an
extent in 2011/12. Market trends indicate that rice consumption growth will be influenced by
population expansion but that this growth in consumption will be somewhat undercut by
consumptions patterns accompanying an increased economic prosperity. Population growth has been
steady, continuing to spur consumption. While rice and beans have long been considered the
traditional diet (even the ideal diet, according to some researchers), they continue to be associated with the food of the rural poor. As income levels increase, consumption preferences shift from rice
to pasta and bread.
Millers continue having difficulty with milling hybrid varieties of rice, due to higher breakage rates.
Hybrid varieties benefit producers in the field but can create problems for producers when
negotiating rice sales with the mills.
2011/2012 Rice Trade: Rice import estimates are maintained at 600tmt, slightly lower than USDA
official estimates. Imports are expected to come primarily from Brazil’s Mercosul partners. (See
Table 3.1) Rice exports are expected at 700tmt, a 52 decrease from 2010/11. Brazil’s 2010/11
exports were a record high, nearly triple the prior record year, levels only made possible through
government support. At 700tmt, 2011/12 exports are estimated to be the second-largest export
volume on record. The government support program used in 2010/11—PEP—is triggered when the
market price dips below the Brazilian government’s official minimum price. Currently the market
price for rice is 23 percent higher than it was in 2010/11, so it is probable that the market price will
not go below the official minimum price. For that reason, it is expected that 2011/12 rice exports
will not be supported by the PEP program. Traders anticipate a continuation of milled and parboiled
rice shipments to the countries along the Atlantic coast of Africa and broken rice shipments to
Senegal.
2012/13 Rice Supplies: Rice production area in 2012/13 is forecast at 2.8 million hectares, a ten
percent increase from 2011/12. The rice industry is forecasting that the 2011/12 production
contraction will normalize rice supplies after the 2010/11 oversupply. The forecast growth
incorporates the recovery of production area lost in 2011/12. Increased production area is forecast,
in particular, for Santa Catarina and Rio Grande do Sul. The recovery of dry-land rice production
area in Mato Grosso—in 2011/12 there was a 47 percent decrease from 2010/11—is not forecast.
Rough rice production is forecast at 13.5mmt, a 15 percent increase from 2011/12. Production area
recovery and the return to average trend yields (after the 2011/12 yield divergence due to the
December-January drought) should account for the production increase.
2012/13 Rice Consumption: Rice consumption is forecast at 8.3mmt, a three percent increase from
2011/12. With increased rice supplies, consumption of feed rice is forecast to increase. After stocks
dropped to 400tmt in 2011/12, stocks should rebound to 1mmt in 2012/13.
2012/13 Rice Trade: Rice imports are forecast to hold steady at 600tmt. Mercosul partner countries
are expected to remain primary rice suppliers to Brazil. Rice exports are forecast at 900tmt, a 28
percent increase from 2011/12. The increase in rice exports is predicated on Brazil’s ongoing work
to establish export markets in Africa. Given the increased production, Brazilian producers and
traders will be eager to export rice to keep domestic supplies low and keep prices from dropping.
Should market prices drop below the official minimum price, it is probable that the Brazilian
government would reactivate its PEP program to support rice exports, thereby reducing domestic
supply and price pressures.
Government Support for Commercialization and Export: In 2011, corn production received
minimal government support. 2012 corn production is forecast to operate similarly. There was no
export support for corn.
2010/11 rice production received a small amount of government support, while exports are likely to
have received significant support through the PEP program. (See Table 4.2) As a result of the
strong implementation of the PEP program, accompanied by government-operated options contract
for purchasing product from farmers, the Brazilian government estimates that almost 22 percent of
2010/11 rice production participated in its support programs. PEP use is not projected for 2011/12.
When government support for 2009/10 wheat production and exports was originally reported in
January 2011, participation rates were recorded at only 12 percent. (See Table 4.4) However, given
the lengthy cycle of the PEP implementation and reporting, the government raised the 2009/10
government support for wheat production and exports. Final 2009/10 government support for wheat
through PEP rose to 3.3mmt, and exports reached a record 2.5mmt, phenomena which testify to the
impact which the PEP program has on trade. With the 2009/10 data revised in January 2012,
program participation rose to 72 percent. 2010/11 exports at 1.8mmt were almost all supported by
PEP. PEP use for wheat is forecast for 2011/12.
March 2012
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