Corn exports of 2 million tons over the first half of the year were down 40 percent year on year, but are expected to pick up and reach 7 million tons by the years end, exporters said. Shipments of corn reached 7.7 million tons in 2009.
The drought and restricted exports of corn from Argentina and the strong output from Brazil over the past years has elevated Brazil to the rank of world No. 3 corn exporter.
Brazil's 2009/10 corn crop is seen at a hefty 53.5 million tonnes but about 85 percent of that will be consumed locally by the country's large pork and poultry industries.
With Brazil's real strengthening against the dollar, corn exports tend to dry up. But the government's so-called PEP subsidies, which provide aid for the shipment of grains to the main markets and ports, resulted in strong exports in 2009. More PEP subsidies should stimulate exports for the rest of this year.
"We are already seeing ships coming for corn. For July, 300,000 to 500,000 tons should be shipped," a trader at a multinational grains company who declined to be named said.
The government's crop supply agency Conab has already begun auctioning off the contracts that will entitle the grain sector to reimbursement of freight costs for 3.6 million tons of corn so far this year.
"Of the 3.6 million tons, I think only 1.5 million tonnes has been traded for export," the traders said, adding this should grow due to the new PEP auctions planned by Conab.
Conab auctioned a lot of PEP subsidies for the transport of 1 million tonnes of corn. The market is expecting another five auctions of similar size through the year.
"Many large companies are doing in-house deals to our own destinations where we have facilities," an employee at a multinational trading company said, adding Japan and South Korea would be important destinations.
Sergio Mendes, the director general of the national grain exporters association Anec, said that Brazil had exported 2 million tons of corn through June this year compared with 3.4 million tons over the same period last year.
But he added exports will likely close out 2010 at 7 million tons due to the PEP subsidies.
"The more optimistic think it could reach 10 million tons," he said. "I doubt there will be time to ship that much."
Brazil's main southern grain ports of Santos and Paranagua have been hit with several days of rain that has slowed dry bulk loading of grains and sugar. There is also a lengthy queue of ships waiting to load sugar and other commodities off the ports - estimated over 100 vessels. Wait times have grown to several weeks. (Reuters)
