Maria Cappuccio 


The global economy is projected to grow by 3% this year and 3.3% in 2017 well below average, and unlikely to expand any faster in 2016 than last year, its slowest pace in five years, according to the latest assessment from The Organisation for Economic Co-operation and Development (OECD), with the downgrade spread across both advanced and major emerging economies, the largest impacts expected in the US, the euro area and economies reliant on commodity exports, like Brazil and Canada. Financial instability risks are substantial, as demonstrated by recent falls in equity and bond prices worldwide, and increasing vulnerability of some emerging economies to volatile capital flows and the effects of high domestic debt. Global growth prospects have practically flat- lined, recent data have disappointed and indicators point to slower growth in major economies, despite the boost from low oil prices and low interest rates. Given the significant downside risks posed by the financial sector the OECD urged, policy makers to strengthen growth and reduce financial risks.


The agricultural sector has been hit by low economic growth- the downturn in China as it transits from an industrial to service based economy, low commodity prices and volatile currency movements. Record grain and oilseed production has outpaced consumption for the last three marketing years, despite an intensification of the El Nin~o weather phenomenon. While, high output projections for 2016 crops are expected to sustain stocks, already at record levels, keeping prices under pressure in 2016/17.


In the Northern Hemisphere, planting of the 2016 winter wheat crop, which accounts for the bulk of the wheat cultivated globally, is complete; conditions have not been entirely ideal in some regions, due to the influence of the prevailing El Nin~o — have made it through winter without any unusually high winter damage, encouraging prospects for the 2016 harvest. With a small drop in the global wheat area, the UN’s Food and Agricultural Organization (FAO), forecast global wheat production at 723mt (million tonnes) in 2016, below last year’s record, mostly due to dry weather conditions reducing winter plantings, in Russia and Ukraine, with smaller crops the EU and India.


US wheat sowings expected to fall by 3m/acres to 51m/acres in 2016/17, the smallest all-wheat area since 1970 reflecting the downturn in commodity prices-winter wheat plantings to fall to 36.6m/acres Hard Red Winter (HRW) 26.5m/acres, Soft Red Winter (SRW) 6.7m/acres, small increase for White wheat to 3.4m/acres). Early indicators suggest the US wheat crop will be just below 2015, higher yields expected to make up for reduced winter plantings, and unusually, weak autumn sowings unlikely to be followed by some gain in spring plantings. Canada is also expected to cut acreage to 9.3m/acres, with a recovery to average yields, output is expected to reach over 28mt, some 700,000mt up on last year. With plantings complete, the focus shifted to the progress of El Nin~o, and whether its effect will diminish in the spring and fade or, give way to a developing La Nin~a. Meteorologists, suggest that in the past, the US has been subject to greater risk of unfavourable weather in the summer months, after the winter wheat crop harvest.


Favourable planting conditions and mild winter weather across much of the EU, with most crops well-established, benefiting from plentiful soil moisture, lifts prospects for this year’s harvest. Copa/Cogeca estimate the EU soft wheat crop at 148mt below last year’s 150mt crop, due to an increase in the sown area of 560,000/ha to 24.5m/ha, above both 2014 and 2015. Strategie Grains confirmed the EU’s winter cereals are mostly in good 

condition but cut their forecast for soft wheat to 143mt, based on smaller sowings in some parts of the EU’s eastern countries. Dry weather forced Ukraine to sharply cut the area under wheat and in Russia also, expected to reduce crop output below last year. Mars, the EU’s crop monitoring body, flagged concerns in February, that winter crops across western and southern Europe, as well as Germany, Romania, southern Poland and western Ukraine, remain vulnerable to frost, after a warm winter prevented the development of cold resistance.


India’s wheat production in 2016 is forecast lower reflecting a 4% decline in planted acreage, and poor planting conditions. due to low water supplies in the main reservoirs, early withdrawal of 2015 monsoon and scanty rainfall across the key growing areas of northwest and central India. Trade sources estimate the crop to be c. 75-84mt, down from last year’s crop of 89mt. In Pakistan, wheat output is expected to increase by 3% in 2016, assuming good water supply and adequate inputs. Wheat cultivation in China is anticipated to remain unchanged from last year, reflecting continued government support for wheat and beneficial weather in key producing areas.


In the Southern Hemisphere, early-season dryness in Brazil and Argentina could result in reduced plantings. By comparison, Australia’s wheat season is shaping up for near ideal conditions. Abares expects Australian farmers to plant a near-record wheat crop in the next few months, above last year, despite benchmark prices falling to over five year lows. Improvements in seasonal conditions could see output go even higher than the 24.5mt forecast, if the recent El Nin~o is followed by a La Nin~a weather event (which has a 50% chance of materializing) bringing rainfall to the country’s east coast and boosting yields.


While USDA forecast US wheat prices to fall to $4.20/bu ($154.45/t) a decline of 16% from the current year. Preliminary data for US wheat plantings suggests growers have switched 

winter wheat acreage to corn this year-a strong dollar, increased competition from other origins, and sharply reduced prospects for future US wheat exports. Rabobank forecast Chicago wheat futures at $4.75/bu ($174.67/t), and trimmed its forecast for Paris futures by E15/t to E170/t ($185.84/t) by the end of 2016, citing strong harvests and fierce rivalry on export markets, leading to massive stock-building in the EU and US.

Egypt, the world’s largest wheat buyer sparked controversy when plant health officials rejected a series of wheat cargoes on the grounds they contained traces of the ergot fungus, even though the country’s grain authority allows levels of up to
0.05%. The rejected cargoes, highlighted an internal clash between Egypt’s agricultural and trade authorities, which stymied trade, until being resolved, but not before international sellers, wary of bidding for further business, boycotted Egyptian tenders, increased the risk premium for shipments to Egypt, and a leading shipper, Bunge, filed a legal challenge. Both ministries subsequently, confirmed the ergot tolerance at 0.05% and shortly after, Egypt’s General Authority for Supply Commodities (GASC) purchased 240,000/t of wheat with prices reflecting a $9-$10/t risk premium. At a subsequent tender on 25 February, the GASC bought a further 300,000/t at more competitive prices- Soufflet amongst few others, offered 60,000/t French wheat for $183.98/t (includes freight $8.98/t), this and other offers reflected a much lower risk premium. The GASC also bought 30,000/t of US Hard Red Spring (HRS) for delivery in 15–25 March taking advantage of record-low freight costs, which typically rules out supplies from the US.


The removal of the export tax on Argentine wheat exports and the devaluation of the peso by the new government raised the profile of Argentine wheat in global markets. Argentine ports loaded almost 1.8mt of wheat (December – 5 February) with exports expected to reach 6.5mt in 2015/16, up over 50% on the previous year. While growers look set to benefit under the new farmer-friendly regime, millers are less than happy having to compete with exporters for supplies. But despite a larger 11.3mt wheat harvest, crop quality is weak with a significant proportion being feed quality, adding to the squeeze on milling quality supplies; and exacerbated by Argentine growers holding grain, in anticipation of higher prices, when Brazil (forecast to import over 6mt-harvest rains reduced protein levels) enters the market, typically in May/June. Milling premium offered by exporters at southern Buenos Aires ports for wheat include: $180/t – 10.5% protein, $160/t – 10% protein and $145/t – 9.5% protein. 

US wheat exports are 13% down year-on-year unlikely to exceed 22mt with US values uncompetitive compared with other origins, like Russia and Argentina, whose currencies have been devalued, and also expected to incentivize farmers to boost production.Argentina’s exports are forecast up by 2.3mt to 6.5mt. With the Russian rouble at a record low, wheat exports combined with other CIS countries are forecast to rise to over 46mt (Russia 23.5/t, Ukraine 15.5mt, Kazakhstan 6.5mt), 6mt more than the previous season. USDA forecast global wheat stocks to close at a record high of 239mt by the end of 2015/16, reflecting mainly an upgrade in Chinese inventories, less wheat used in China and India, and an increase in supplies in the US 26mt and EU 19mt. Wheat futures have declined as favourable weather improved crop conditions, and as US stockpiles rise due to cheaper prices in other producing nations.

CBOT Futures for May delivery fell to $4.4525/bu ($163.60/t – 2 Mar ’16). In Paris, milling wheat for the same month dropped as much as 1% to a three-week low of 151.75 ($164/t). US HRW FOB (free on board) Gulf $201/t and EU France Grade 1 Rouen $164/t – 25 Feb ’16.

Global corn acreage is forecast to expand in 2016/17 by 1% including gains in the US, the CIS, South America and Africa, according to Informa economics-they expect the small increase in production to be absorbed by higher use, with global ending stocks to fall only slightly, but to remain above 200mt.

With low returns for wheat, soyabeans and sorghum, USDA expects US growers to switch acreage to corn and increase corn plantings by 2m/acres to 90m/acres (harvested area 82.3m/ha) in 2016, the first time in four years. Lower fuel and fertilizer costs make corn more attractive relative to other crops; with yields estimated at 168bu/acre — implies a crop of c.351mt, 5mt more than last year, with US stocks at a record level of 50mt by close of 2016/17, pushing prices lower-USDA forecast corn to average near $3.45/bu during 2016/17.


With better crops in several countries, the global coarse grain harvest is forecast at 1.26Bn/t in 2015/16, the third-largest crop on record. Lower crops of corn and barley partially offset by an increase in sorghum. Overall demand for coarse grains to fall by 

6mt to 1.26Bn/t, as sharp fall in oil prices, volatile currency movements and low growth affect purchasing power in several countries. Coarse grains used in food/industry fell by 18mt to 513mt, only partially offset by the increase in feed use up by 13mt to 748mt.

Global corn production at 970mt is lower than last year, but still a significant output, boosted by large crops in the US 346mt South America 111mt (Brazil 84mt Argentina 27mt) and better crops in Canada 14mt, China 225mt and Russia 13mt. Resilient feed demand in Brazil, Russia and especially China account for most of the 14mt anticipated rise in corn use up to 597mt for animal feed partially offsetting a sharp contraction of 24mt in corn used for food/industrial use, down to 371mt in 2015/16.


Challenging conditions beset the ethanol industry through 2015, sharply low oil prices coupled with regulatory indecision regarding future volume requirements under the Renewable Fuel Standard (RFS), dented profit margins. Late last year, the Environmental Protection Agency (EPA) finally set the volume requirements for the RFS for 2014–2016 at 14.5 Bn gallons, well below industry expectations (800 m/gallons less than production capability), and below those mandated by Congress, which the industry continues to challenge. The first three months of 2016, saw energy prices plummet, with front-month ethanol futures trading at $1.350-$1.406 a gallon in New York, less than half their 2014 highs. The Andersons Ethanol Group recently released its fourth-quarter and full-year reports that showed overall ethanol production in 2015 up by 12m/gallons to 384m/gallons, but pre-tax income for 2015 at $28.5m compared with the previous year’s $92.3m.

Despite lower oil prices-US ethanol exports rose to 850m/gallons, helping to limit the build-up of ethanol stocks, as supply continues to outpace demand. Even with record stocks and a lull in demand, the industry remains upbeat for 2016/17, hopeful that international demand for ethanol will grow, and, domestic demand, based on the US Department of Energy’s forecast that gasoline use in the US is expected to rise to near record levels this year, will pick-up. Geoff Cooper senior vice president of the Renewable Fuels Association said “I think we’ll set a new record this year for US ethanol blending despite the fact that we have $30 oil and low gasoline prices.”

USDA project corn use for ethanol in 2016/17 at 5,225m/bu (133mt), the same level as last year, producing a record output of ethanol of 14.7Bn gallons and 40mt of livestock feed (36mt Distillers Dried Grains and Solubles (DDGS) 4mt Corn Glutenfeed/meal, with almost 13mt of DDGS exported to several countries, including 6mt to China.

Due to higher prices set for corn, above those of the world market, China became a leading market for cheaper feed ingredients like DDGS, sorghum and barley to support growing feed demand. The planned reduction in the government’s support price for corn, is to be introduced over the next few months; with the Chinese government keen to reduce the huge stockpiles of corn, forecast at 112mt by the end of this season, are also expected to slow imports of cheaper feed ingredients like DDGS, sorghum and barley to prevent further growth in corn stocks. The IGC expect the change in support arrangements will see a decline in the planted acreage for corn in marginal areas, with China’s corn production to fall to 212mt in 2016, 12–13mt below last year’s record crop.


Global corn trade in 2015/16 is forecast at 131mt, but could be revised up, according to Jannie de Villiers chief executive of Grain SA, if the official estimate for South Africa’s 7mt drought-affected corn crop is further downgraded, increasing corn imports from 2mt to 5mt. US corn exports are forecast lower this season, down from 47mt to 42mt, due to fierce competition from Brazil, Argentina and Ukraine. By the end of February, Brazil’s harvest was ahead of schedule with planting of the second crop ahead of last year and exported from July–December, a period that coincides with the US harvest, and means Brazil’s corn exports will hit the market sooner, inflicting further pressure on US prices. Combined corn exports for Brazil (36.5mt) and Argentina (19.5mt) are forecast to rise from 40mt to a record 56mt in 2015/16, both countries benefiting from depreciated currencies, making their exports more competitive relative to other suppliers, especially the US.


Global corn stocks are expected to rise by 3mt to 209mt in 2015/16, aside from the large build-up of Chinese stocks, US stocks are forecast to rise to a record 47mt. Average export prices for Corn (YC3), dropped to $161/t FOB (24 Feb ’16), and Argentine (up river) $164/t (24 Feb ’16). Futures markets gains limited by record global grain supplies and expectations US farmers will boost seedings in the planting season already underway in the southern part of the country — CBOT Futures Corn contract May ’16 dropped to $3.562 at close on (2 Mar ’16).


World barley area is expected to be broadly unchanged from last year with increases predicted in Europe, the CIS, North America, but with drought containing the area in North Africa. World average barley yields are projected to fall, leading to a 3% drop in production implying a crop of c.141mt. Conditions for winter crops remain favourable across the EU. With the contraction of beer and distilling markets across the EU, malt demand for 2016/17 remains unclear with buyers waiting until firm demand materializes, similar to the situation in the US and Canada. USDA forecast that combined exports of barley and sorghum to China will decline to 9.6mt in 2016/17 from14.5mt in the current marketing year, as China reduces the support for domestic corn.

Large harvests in Turkey, Morocco, Argentina, Australia, Canada and the EU lifted global barley output up by 5mt to 146mt in 2015/16, offsetting smaller crops in the Ukraine and Russia. Barley use is expected to increase by 6mt to 147mt (feed use up by 2mt to 98mt, food/industry use up by 4mt to 48mt). Withbetterdomesticcropsinseveralcountriestradeis forecast slightly lower at 23.6mt mainly due to reduced imports into China, Iran and Saudi Arabia, with stocks by the end of season, similar at 25mt. UK Feed Barley Ex-Farm £95–100 ($132.7–139.6 25 Feb ’16); EU Feed Barley (France) FOB Rouen $168/t (Feb 24’16) some $30/t lower than last year. Paris 

Futures Malting Barley May contract closed at E214/t ($235.9/t Feb 25’16).


The planted area for US sorghum is expected to fall by 14% in 2016 in response to reduced demand from China, with combined imports of sorghum and barley to fall to 9.6mt in 2016. By contrast to last year, when production of sorghum increased by 4mt to 68mt helped by a bumper 15mt US harvest and better crops in Sudan, Mexico, Australia and India. Global sorghum demand for animal feed rose by 3mt to 67mt mainly due to feed use in China. While trade in 2015/16 is forecast at 10mt, below the previous year, when China imported a combined total of 20mt of sorghum and barley and 6mt of DDGs. Sorghum prices (April) FOB — Nola $177.06/t (25 Feb ’16).


Abares expects global soyabean output to fall by 2% to 311mt in 2016/17 down 10mt on this year, with declining output in Argentina and the US where farmers are expected to switch extra area to grains; while soyabean prices are forecast at a ten- year low of $349/t (based on US Gulf), due to abundant supplies, including record high carryover stocks of 80mt from 2015/16 and an anticipated increase in global soymeal stocks-expected to weigh on the price of soyabeans, due to the high meal content of the oilseed.

US soyabean acreage is expected to fall for a second successive year, this time by 200,000 acres to 82.5m/acres in 2016 according to the latest assessment from USDA, with lower soyabean prices to average $8.50/bu ($312.32/t) in 2016. 


Global oilseed output is expected to reach 527mt in 2015/16, slightly below last season, boosted by record soyabean output in major exporting countries, either harvested, or being harvested in early 2016, lifting production to 321mt; with small increases for other crops including, groundnut 40mt palm kernel 16mt and copra 6mt and lower crops for cottonseed 38mt, sunflower seed 39mt and rapeseed 68mt-poor prospects for the rapeseed harvest this year, suggest prices, unlike soyabeans are likely to rise. Large stocks and ample supplies have pressured soyabean prices, to record lows. Global crushings, are expected to rise by 6mt to 446mt especially in China and Argentina-the lower prices improving crush-margins in those countries and in Brazil, with oil meal use up by 11mt to 300mt. While trade in the major oilseeds is marginally up on last year at 148mt, stocks by end of 2015/16 of 91mt are at a similar level to the previous year.

South American production is forecast at 174mt (Brazil 100mt,Argentina 59mt Paraguay 9mt others 6mt). The Brazilian real has plummeted against the dollar R$3.95 to US$1.00 (26 Feb ’16) exerting stronger competitive pressure on US exports.

Soyabean imports into China are expected to remain strong, unlike other grain crops.

Global soyabean trade is raised by 4mt to 130mt in 2015/16, due to rising Asian imports forecast at 95mt, with China expected to import 81mt-83mt this season. Increased imports are also expected for Malaysia, Philippines,Taiwan,Thailand, Indonesia,Vietnam and South Korea, due to strong demand for protein. US soyabean exports are expected to fall to 46mt while Brazil’s exports are expected to increase to 57mt.


With the recent change of government in Argentina, tariffs on meal and oil have been removed increasing incentives for domestic crushing. Volumes for the first three months of 2016 are expected to be at record levels, and likely to pressure crushing margins elsewhere, especially in the US. Although Bunge’s CEO Soren Shroder said the effect would be short-lived noting that even before the reforms, Argentine crushing was running at ‘near capacity’ limiting the potential growth in volume to the first half of the season.


While Brazil is expected to benefit from large crops, strong domestic meal demand for animal feed, and a competitive global cost structure, following the decline in the value of the real, US export volumes with a strong dollar are facing intense pressure. Bunge expects the new US harvest to bring improvement in the fourth quarter as demand switches back to the US.


Soyabean prices have plummeted reflecting large crops over the past three years, large stocks and the prospect of another sizeable crop in 2016. Futures markets registered a sharp downturn when acreage and prices for soyabeans were released. CBOT Futures Contract soyabeans May ’16 fell before recovering on the back of a bullish assessment for Chinese soyabean demand to close at $8.61/bu (Mar 2 ’16).

Average export price for soyabeans 2Y FOB Gulf $334/t (Feb 29 ’16) some $177/t below last year; while Soyabean prices out of Brazil (Paranagua) $326/t and Argentina (Up River) are quoted at $317/t respectively (29 Feb ’16).


While China is expected to crush almost 81–83mt of soyabeans in 2015/16, margins are expected to be weaker, despite strong demand due to excess crushing capacity. Projected soyabean meal exports are raised by 4mt to 64mt mainly due to Argentine sales, up by almost 4mt to 32mt to countries, other than China, in South East Asia in 2015/16 reflecting strong feed demand. With a significant fall in prices year-on-year, the average export price for Argentine soyabean meal pellets (Up River) $307/t (Jan ’16); CBOT Futures contract soyabean meal-May’16 closed at $262.8/t  (1 Mar ’16). 


Grains buck the trend in Brazil

With its economy shrinking, at a time when the price of iron ore, as well as steel and many other ‘hard’ commodities remain weak, and with state-owned oil company Petrobras in deep crisis, most of the news coming out of Brazil at the moment, is extremely bad, writes Patrick Knight.

But there is one important exception, and that is agriculture, with special emphasis for the all important grains industry. The current exceptionally severeEl Nin~o phenomena has forced estimates for the 2015/16 soya and maize crop to be revised down slightly, and last year’s all time record crop of just over 200mt (million tonnes), may not be exceeded, as had been hoped. But because about a million additional hectares have been planted to soya for 2015/16 as was in the previous season, most of that in Mato Grosso state, this year’s total output will be the same as last year’s. While conditions in the north and north east have been drier than usual this year, although excess rain which has fallen in the south of the country, something which invariably happens when a strong El Nin~o is active, this has only prejudiced the rice crop there. The soya and maize crops have been very similar to those of last year in the south of the country.

World grains prices have weakened only slightly following the news that Brazil’s crop will be high again, coupled with the news that the new government in Argentina, will be treating agriculture fairly from now on. Farmers were persecuted during the ten years when governments were headed by the Kirchner couple, and larger crops and exports can be expected from the southern cone producer from now on. The fact that the US dollar has gained strength against other currencies, notably Brazil’s real, has meant US grains are less competitive in many export markets. Being unable to export at a profit, many farmers in the US seem likely to switch to planting more maize, which finds a ready market on the domestic market, in preference to soya this year.

Many analysts worry about the prospects for China’s economy, and the negative impact this is having on the prices of most hard commodities, notably iron ore, steel and other metals. But the Chinese government is having some success in switching priority away from investments in housing and infrastructure, to consumers. Higher wages mean that demand for food and feed ingredients continues strong, although imports of grains are not growing as fast as they did before 2013. Even so, the destination for 77% of Brazil’s soya beans last year, is likely to need an extra 2mt this year. This is not as much as the 10–15mt extra of earlier years, but still pretty good. Some analysts worry that the country’s complex financial situation, which includes large debts run up by regional governments and by individuals, could mean a hard landing lies ahead, and the Brazilians are praying this does not happen.

Although soya remains Brazil’s most important farm product, and continues to be Brazil’s leading export earner, more remarkable has been the surge in production and export of maize in the past few years. Until quite recently, Brazil was frequently a net importer of maize, huge quantities of which are used by the meat producers there. A massive 27mt of maize were exported from Brazil last year, an all-time record, and this year could see a repeat of that. The increase has been almost entirely due to the fact that in the past few years, maize has been planted as a second, ‘winter’ crop, in the north of the country, where the grain is sown immediately the early varieties of the soya which form about a third of the crop, are harvested. Until a few years ago, the only maize planted in Brazil’s mild, but dry ‘winter’, was sown in the southern state of Parana, but this has changed in recent years. The area planted to summer maize, not planted in the north, has remained static. So while 5.7 million hectares was planted to ‘summer’ maize, (still referred to as the ‘main’ crop) last year, the area planted in the ‘winter’ totalled 9.6 million hectares. About a third of the soya planted in Mato Grosso and elsewhere in the north, is of ‘early’ varieties, harvested in time for ‘winter’ maize to be planted early enough to take advantage of the moisture left in the soil after the wet summer months.

Leading markets for Brazilian maize, which has been aided by the 50% devaluation of the ‘real’ in the past 12 months, can now be sold more cheaply than that from the US, include Vietnam, Iran and South Korea. So far, China has not figured strongly in the list of buyers for Brazilian maize, but is expected to take some this year. Some analysts suggest that China will in future prefer to import more meat, rather than the grains needed to feed locally raised stock. There is little space for more animals to be accomodated there apparently.

With the widening of the Panama canal to be completed in the next few months, the news that about 20mt of the 100mt of the grains exported from Brazil during 2015, left from ports in the North and North East of the country, compared with the 13mt which left from ports in this region in 2014, is extremely significant for the maritime industry and for grain traders.

Although Santos, Paranagua and Rio Grande in the south east and south each still handle larger volumes than any one port in the north, between them, the river ports of Itacoatiara and Santarem on the Amazon river, together with Vila do Conde, at the mouth of the giant river, the fast-growing port of Itaqui in Maranhao state, and Salvador in Bahia are benefiting from the major investments which have been made in recent years in facilitating river transport. Taking grains to deep water ports by barge, rather than road can cut $40 per tonne from the cost of getting beans and maize from farms in the states of the north and nort east, where about 50% of all Brazil’s soya and maize is now planted, to the ports of this region. These ports are all three or four days’ less sailing time to ports in Asia and Europe, than those in the south and in Argentina. The fact that larger ships will be able to navigate the Panama canal in future, will give a new spur to the building of new loading facilities in the north, and require numerous new large shiploaders, as well as encourage new plantings there.

Although the deep financial crisis now affecting Brazil means that the construction of new roads, and improvement of existing ones by official bodies has slowed, a group of leading trading companies, which have already been responsible for building dozens of new terminals in the northern part of Brazil, now plan to build new railway lines. A 930km line which will run parallel to what is now a major road route for the movement of soya to the north, the BR 163, which has not been duplicated as promised, should mean that the growth in the share shipped from the north will continue to increase. The north is the only area remaining in Brazil where large tracts of land, most of it previously used to graze cattle at very low densities, but which can be converted to growing grains at relatively low cost, still exist.

The present weakness of the Brazilian currency, has largely compensated for the recent falls in the world price of soya and maize. As a result, Brazilian farmers have not seen their incomes fall much, even though the price of maize and soya has fallen.
But the price of imported goods, notably fertilizer has risen, and because farms and producing regions in Brazil are much further from ports and markets than those of its competitors, the country continues to be extremely vulnerable to the weaknesses of its infrastructure, whose capacity and quality has not kept pace with the growth in the amount of grains produced and exported.