The Brazilian government will offer up to 500 million reais ($159 million) in subsidies to help corn producers sell their large crop in the 2016/17 cycle, according to the Wednesday edition of the federal register.
Separately, Brazil’s agricultural statistics and crop supply agency Conab said it would acquire up to 1 million tonnes of corn grown in the state of Mato Grosso through an auction of option contracts at a price of 17.87 reais per 60-kg bag.
Conab said the auctions, which would begin within weeks and give producers until September to exercise the options, were due to expectations of record corn stocks and slow exports to date.
Earlier in April, Conab said corn output in the season should reach 91.5 million tonnes, more than the 88.9 million tonnes estimated last month, as favorable weather boosts prospects for the Brazilian crop.
Although the program is intended to boost domestic sales of corn, some traders have used the grants to make export deals financially feasible, since government subsidies reduce the cost of transporting the cereal from producing regions to ports.
Brazil, traditionally one of the world’s largest wheat importers, has also exported several shipments of the grain recently as a large domestic crop and a government subsidy made the exports competitive abroad, according to data from ports.