Jan 28, 2016

Brazilian Governmental Auction of Corn set for February 1st

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian government announced last week that Conab would auction off up to 500,000 tons of government owned corn stocks to livestock producers as a way to ease record high domestic corn prices. The first auction of 150,000 tons is set for February 1st. Approximately 95% of the government owned corn is in the state of Mato Grosso where farmers continually produce an excess of corn.

The government has the authority to sell grain stocks whenever the market price is above the price the government has set for selling stocks. The current Price to Liberate Stocks (PLE) in Mato Grosso is R$ 17.50 per sack of 60 kilograms while the current market price in Sapazel, which is located in western Mato Grosso, is R$ 23.00 per sack. The actual price of the corn will be announced two days before the auction. The purchaser must pay for the corn by February 10th after which they can have it shipped out.

The first auction is directed toward producers of poultry, hogs, beef cattle, dairy cattle, cooperatives, feed manufactures, and food manufactures. The Minister of Agriculture indicated that the remaining 350,000 tons will be auctioned off before the safrinha corn harvest begins. The Minister has also approved the sale of 100,000 tons of rice, the sale of up to 1.5 million sacks of coffee, and the purchase of 200,000 tons of wheat with an option for an additional 100,000 tons.