Brazil's food supply and statistics agency Conab may sell as much as half a million tonnes of public stocks of corn stored in Mato Grosso after prices spiked in the internal market catching hog producers off guard, an official told Reuters on Thursday. Rogério Gonçalves, Conab superintendent of commercial operations, said in a telephone interview that the exact quantity to be sold by the government at one or more auctions will be determined by the Agriculture Ministry, which has yet to formally authorize the sales.
"Studies are underway to define the quantities and the location of the stocks to be sold first," Gonçalves said.
The process involves only corn stored in Mato Grosso state, where volumes currently in silos are estimated at around 500,000 tonnes, he said.
The initiative underscores the government's role in supporting Brazil's farm industry and the importance of Mato Grosso, where 1.4 million head of cattle and 627,446 hogs were slaughtered in the fourth quarter of 2018, according to Brazilian statistics agency IBGE. Mato Grosso is also Brazil's top producer of soybeans, cotton and corn, which makes up about 70 percent of the hog feed mix.
Gonçalves said the government has a mandate to step in when agricultural commodities prices fall below a certain threshold, for example paying minimum prices to support corn growers. The government can also interfere by selling grains when the price of a certain commodity surpasses a pre-set level, which is the case of corn now, the official explained. In February, the world's largest meat-packer JBS SA ordered its first shipment this year of corn imported from Argentina because of the high price of domestic corn.
Authorization to carry out the corn auction, the first since July of 2018, is likely to come as early as next week from the Agriculture Ministry, Gonçalves said. According to a statement from the ministry on Wednesday, corn prices in Mato Grosso were up 23 percent on the year, to an average of 27 reais ($7.02) per 60-kilo bag.
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