Increase in the supply tends to interrupt high corn

The expectation that China will pour in large volumes of corn market their inventory and the approaching onset of planting the new crop americana tend to reinforce the plentiful supply and curb the recent reaction of the grain prices on the Chicago Stock Exchange, especially if there is no climate shock. Although Brazil prices remain very close to the Exchange, the international trend may contain the upward trajectory that has reduced the margins of refrigerators of poultry and swine.
"We can have raises. But, to the extent that they confirm the increase in area in the United States and the weather help planting, from July corn tends to enter accelerated phase, not only breaking the $ 3.20 a bushel [in Chicago], but approaching $ 3, "predicts Peter Dejneka, AGR Brazil consulting. Until the beginning of this week, the futures of two grain delivery accumulated 2% high in Chicago Stock Exchange this year. However, crashes in the past two sessions, to $ 3.6450 per bushel, has left rates stable in relation to the end of 2015.
Contributed to the recovery at the beginning of year stocks lower than expected in the u.s. on December 1. The slight recovery of the prices of oil also began to offer some support to corn, since it encourages American refineries to increase the mix of alternative fuels, like corn-based ethanol, gasoline.
According to Stefan Tomkiw, analyst at Societe Generale in New York, current estimates suggest that the Americans will sow this season 36.3 million acres with corn, up from 35.6 million the 2015/16. "I think the level of $ 3 to $ 3.10 a bushel would be a floor at first".
The beginning of the sowing of corn in the UNITED STATES, in April, is usually marked by speculation about the weather. The World Meteorological Organization points a weakening of El Nino in the next three months, and the possible occurrence of La Nina in the sequence continues to be monitored. "If La Niña arrives and brings drought to the us, the market will operate on top of it. Corn can go to $ 4.50 a bushel, but later crash, "says Dejneka, AGR Brazil.
Is also on the radar of the market the fact that Argentina must enlarge the supply of the commodity this year, after removal of the export rate of 20% imposed by the local government, bringing additional pressure to the quotes. "If the American crop is good and the dollar does not rise, the Brazilian producers will face problems with falling corn prices in the second half," says Dejneka.
Favored by the American currency appreciation against the real, corn prices in Brazil have soared more than 15 percent in 2016, to R$ 43 a sack, as the indicator Esalq/BM&F. With the loss of competitiveness of American corn, the Brazilians sold abroad a record 28.9 million tons last year, 40% up to 2014. In Mato Grosso, who heads the production in the country, 56.6% of expected production for the 2015/16-the off-season is in the process of planting-has already been marketed.
The enthusiasm for exports helped dry the internal market and turn the yellow light between the creators of poultry and swine in the country, who have seen their costs rise significantly with the price of corn. "We used to speaking since May last year that the Exchange was helping exports of corn, but the industry slept in point and despaired, which served to put the prices where they are," says Peter Dejneka.
Yesterday in Dubai during the Gulfood-largest food fair in the Middle East, the President of the Brazilian Association of Animal protein (ABPA), Francisco Turra, complain about the increased costs resulting from the corn. "Many companies are afraid to close long-term contracts [export] due to the moment of uncertainty in Brazil, against the instabilities of the elements that make up the cost," says the former Minister in statement issued by the entity.
To try to ensure the supply of grain used in animal feed, the Brazilian Government began to auction off public stocks. On the 1st of February, Conab sold 1000 of 125.9 148 1000 tons offered. There were two other auctions-a last week and another on Tuesday-with 150 1000 tons each, but were traded only in the 1000th in the second 1000 76.4. "Fears about the quality helps justify the lack of interest by some lots," says Andrea Lamb, Labhoro Corretora de Mercadorias.
For Andrea, the Chinese Government''s decision to dump stocks of old corn yields should also significantly influence the direction of grain prices. "Until today, no one could really scale these stocks. Some speak in the range of 180 million to 200 million tons. The u.s. also tend to rush to sell as much corn as you can before the entry of brazilian off-season, starting in June.