September 26, 2014

The Brazilian government announced the rare action of buying between 1 million and 1.5 million tons of corn and between 400,000 and 500,000 tons of wheat to stockpile.  The move comes just weeks before national presidential elections, and is being seen as a way to appeal to farmers being negatively affected by low prices.  Usually Brazil compensates farmers if prices fall below a set minimum floor price with farmers being able to make claims through a program of ‘auctions’.  Recently however, the government allocated a large portion of the money set aside for corn to support the cotton industry leaving only enough money for one more corn auction. The stockpiling plan is being seen as a way to support the corn industry while bypassing the ‘auction’ system.  The Brazilian Agriculture Minister Neri Geller also forecasts the country’s 2014/15 soybean harvest to be between 90 and 96 million tons and Abiove, the country’s vegetable oil industry group, predicts a harvest of 91 million tons.  Further bumper crops will add additional pressure to agricultural prices in the country creating unease among farmers.

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