Corn exports from Brazil in the second half of 2005 are unlikely due to the strong real against the dollar and losses to domestic output from drought, analysts said on Monday. "With the dollar between 2.38 and 2.40 reais, exports are not viable," a grains analyst at Celeres consultants, Leonard Sologuren, said.
Brazil's real has been trading at its strongest in 3 years against the dollar, which has erased margins in local currency terms for producers who previously had made profits on exports when the dollar was at around 2.8 to 2.9 reais.
But the currency is not the only force at play. A drought severely cut into Brazil's main summer corn output in the south this year and winter crop plantings are down due to the lack of capital in the hand of producers, many of whom were nearly wiped out by the summer crop drought.
"Exports have worked only when there is an excess," said FNP grain specialist Daniel Dias. "There's no product to drive domestic prices down to international levels."
Corn exports in the first half of 2005 have fallen sharply to 1 million tonnes from 3.4 million over the same period last year. Total corn exports reached 5 million tonnes in 2004.
"For the whole year, corn exports are unlikely to surpass 1.1 million tonnes," Dais said. Monthly exports of the grain have been falling since March when they peaked at 400,000 tonnes.
In May, they did not exceed 15,000 tonnes. Brazil's corn output should fall to 36 million tonnes from 42 million last year, according to the agriculture ministry.