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Brazil Corn Surplus Limited by Meat Industry, Rabobank Says

Corn stockpiles in Brazil will be limited as livestock feeders increase use of the grain, Rabobank International said.

The country’s expanding meat industry may limit corn inventories through 2015, when inventories may be as low as 2 million metric tons, the bank said in a report today. Prices will need to average about $6.35 a bushel at ports near Paranagua to spur corn production, Rabobank said. Animal feeders will use 16 percent more corn compared with this year, it said.

“Despite Brazil’s reputation as an agricultural powerhouse, large land-area availability and vast farmer know-how, an ongoing fast-paced development of its meat industry may hinder” gains in corn stockpiles, according to the report, written by Guilherme Melo and Renato Rasmussen. “Strong incentives must be in place for Brazilian farmers to boost corn production.”

Corn futures on the Chicago Board of Trade have gained 2.6 percent this year, making it the best-performing grain in 2011.

Poultry production will rise 3 percent annually in the next five years as demand increases, according to the report. Pork output will gain 2 percent annually and the number of cattle in feedlots will rise by about 5 percent a year for the next five years, Rabobank said. Demand for corn from dairy cows will rise 6 percent annually, the analysts said.

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