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Brazil holds new corn auctions

Brazil holds new corn auctions

SAO PAULO: Brazilís food supply agency Conab will hold this yearís third auction of corn contracts in a bid to assist growers in Mato Grosso (MT) to receive at least the minimum value guaranteed by the government, according to a statement Tuesday.

The auctions, scheduled for May 25, involve three financial instruments including put options and the so-called PePro and PEP contracts for growers in Mato Grosso, which accounts for about 27 percent of Brazilís output.

The government plans to sell 7,400 corn put options at the strike price of 17.87 reais ($5.77) per bag of 60 kilograms. The put options expire on Sept. 15. The auctions underscore the governmentís concern with local corn producers amid a bumper crop.

Last week, Conab pegged total Brazilian corn output at a record of 92.8 million tonnes this season, compared to 91.5 million tonnes estimated last month, as favorable weather continues to boost agricultural prospects.

World corn stocks should reach the highest levels in history at the end of the 2016/2017, according to Conab estimates, which cited significant output increases in Brazil, the United States and Argentina.

A 37.5 percent estimated rise in Brazilís corn production this season will not be accompanied by higher demand for corn from animal producers, Conab said.

At the last corn auction on May 4, Mato Grosso farmer Endrigo Dalcin, who also presides over the stateís growers association Aprosoja, told Reuters the governmentís support was key to move the market.

ďWhat producers want is to ship the corn out of the state,Ē he said, adding most of the grains traded at these auctions will hit export markets.

Next week Conab will also offer PePro contracts aimed at the sale of 500,000 tons of corn. Under this option, the government pays a premium to participating producers who prove the effective sale and delivery of their grains.

ďThe aim of the premium is to complement the value received by the grower so that it can reach a minimum price,Ē Conab said.óReuters

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