Dry weather, costly fertilizer may hurt Brazil, Ukraine corn output

Brazil's corn output is expected to come under pressure this year due to dry weather, while high costs for fertilizers in strife-torn Ukraine will curb production there, a senior agricultural analyst said on Wednesday.

Lower supplies in Brazil and Ukraine, the world's second and third largest corn exporters after the United States, would support global corn prices that hit multi-year lows at the end of 2014 on record U.S. and South American production.

"In Brazil, corn is being planted right now, we have to watch how that crop develops as April forecasts are looking quite dry," Emily French, managing director of U.S.-based consultancy ConsiliAgra, told Reuters.

"Brazil is producing a record soybean crop but they had some issues with the weather," she said on the sidelines of a grains conference in Singapore.

In Ukraine, which is facing a political turmoil, corn output could be hurt "as fertilizer cost is 45 percent higher and corn is a very expensive crop to plant," French said.

"Maybe they could plant more wheat."

Traders at the event said fertilizer costs had climbed for Ukraine and Russia on weaker local currencies, lowering the countries' chances of benefiting from the advantage over U.S. supplies provided by a firm dollar.

But a senior Moscow-based executive with cargo surveyor Cotecna said Ukraine was not totally reliant on imports for fertilizers and that corn prices would determine planting.

"If they think corn gave them better returns they will plant corn otherwise switch to other crops," the executive said.

Ukraine is expected to export 18 million tonnes corn in 2014/15 (Oct-Sept), versus 5 million tonnes in 2010/11, according to the U.S. Department of Agriculture (USDA).

Brazil is seen exporting 22 million tonnes in 2014/15, from 11.6 million tonnes in 2010/11.

The USDA has cut its 2014/15 forecast for global corn output to 989.7 million tonnes, from 991.3 million estimated earlier. World corn production stood at 989.6 million tonnes last year.

Less supplies from Brazil and Ukraine could push corn to $4.50 a bushel from current prices of $3.80, French said.

"I think the front-month is going to stay rangebound as it has been in 25 cents trading ranges since the middle of January," she added.

"It will continue that way until something happens which then is going to break it to the upside. If it started moving higher you will have congestion at $4.50 a bushel. I wouldn't want to be long $4.50 old-crop corn."