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Country Briefs

  Brazil

Reference Date: 01-June-2020

HIGHLIGHTS

  1. Maize production in 2020 anticipated at record level due to large plantings

  2. Maize exports in 2020/21 forecast at well above‑average levels

  3. Prices of cereals higher year on year, driven by strong demand and weak currency

Maize production in 2020 anticipated at record level due to large plantings

Harvesting of the 2020 main season maize crop is underway and production is officially anticipated at 75.9 million tonnes, 30 percent above the previous five‑year average. The expected bumper output is due to a record‑high planted area, mainly driven by high domestic prices and strong export demand. The large plantings more than offset a yearly decline in yields, affected by rainfall deficits in the main producing states of Mato Grosso do Sul and Paraná. The 2020 aggregate maize production, including the minor season crop harvested recently, is forecast at a record level of 102.3 million tonnes, nearly 20 percent above the average.

Harvesting of the 2020 paddy crop is nearing completion and production is officially estimated at 10.9 million tonnes, about 10 percent below the average, reflecting the reduced planted area. Paddy sowings have been steadily declining over the past 30 years due to farmers’ shift to more remunerative maize and soybean crops and they recorded the lowest level in 2020.

Plating of the 2020 wheat crop is underway and the key producing southern areas are experiencing soil moisture deficits due to the below‑average rainfall amounts since March. Plantings are officially forecast at a near‑average level and slightly higher than the low levels of the past two years, on expectations of remunerative prices. However, if rainfall deficits continue in the June‑September period, as predicted by weather forecasts, crop germination and development are likely to be affected.

Maize exports in 2020/21 forecast at well above‑average levels

Exports of maize, the country’s major exportable cereal, in the 2020/21 marketing year (March/February) are forecast at well above‑average levels of 35 million tonnes. The anticipated high level of exports reflects large supplies from the 2020 harvest and increased competitiveness in the international markets due to a weak local currency. However, maize exports are expected to be lower than the record level in 2019 due to strong international competition caused by the declining prices of exports by the United States of America. Exports of rice in 2020 (January/December) are estimated at 870 000 tonnes, slightly above the five‑year average.

Prices of cereals higher year on year, driven by strong demand and weak currency

Wholesale prices of yellow maize decreased from mid‑April due to improved supplies from the ongoing 2020 main harvest. The temporarily subdued demand from the ethanol industry amid the COVID‑19 outbreak also exerted downward pressure on prices. However, they were on average 50 percent higher compared to May 2019, reflecting the strong demand by the domestic feed sector and for exports, supported by the weaker currency.

Prices of rice sharply declined in May 2020, reflecting improved supplies from the 2020 paddy harvest and weakened domestic demand that had increased in March and April amid the COVID‑19 pandemic. In May, prices of rice were about 8 percent higher year on year.

Prices of wheat, which are on the increase since late 2019, increased further in May and were about 33 percent higher than a year earlier. The increase mainly reflects seasonal low availabilities and prices are expected to rise until the new harvest in August.

COVID‑19 and measures adopted by the Government

As an effort to halt the spread of the COVID‑19 outbreak, lockdown measures were established in mid‑March in a number of states and municipalities, including Rio de Janeiro, Rio Grande do Sul and Sao Paolo. All productive and commercial activities, including cross‑border trade, along the food supply chain have been exempted from the measures.

The Government cut the annual benchmark interest rate to an all‑time low 3 percent to mitigate the negative effects of the COVID‑19 pandemic on the domestic economy. The Ministry has guaranteed the continuous purchases of food from smallholder farmers to supply school canteens, where they remained operational. By contrast, where school meal programmes have been interrupted, monthly subsidies of BRL 55‑60 (about USD 10‑11) are being granted to vulnerable households from April until the reopening of the schools.

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