Brazil: prices fall as producers look to reduce stocks

Brazilian corn prices have witnessed another round of falling prices in recent days as farmers move to unload some of their corn stocks ahead of soybean harvesting.

“On the seller side, some analyze the need to cash out and others are more willing to negotiate, aiming to free up warehouse space for the entry of the summer [soybean] harvest. In addition, exports remain sluggish, and estimates released last week by Conab indicated possible good productivity in the 2021-22 harvest,” Brazil-based Center for Advanced Studies on Applied Economics, or CEPEA, said.

Brazil’s corn exports to date in the marketing year 2020-21, which runs February 2021-January 2022, totaled 12.3 million mt as of October, down 46% from the same period of the previous year, customs data showed.

Drought and frost lead to extensive yield losses in corn crop in MY 2020-21, while high domestic corn prices reduced the supply available for export.

However, the drop in domestic corn prices and the appreciation of the dollar against the local currency may attract new interest for exports, the country’s national agricultural agency Conab said in its weekly report.

The continuous inflow of imports was also weighing on corn prices.

Brazil imported 2.14 million mt of corn over January-October, compared with 1.37 million mt in the whole of 2020, customs data showed.

Corn imports into Brazil totaled 278,611 mt in the first eight business days of November, already surpassing the 209,348 mt imported in the whole of November 2020, customs data showed.

Although Brazil is among the world’s largest exporters of corn, the southern states often import from Paraguay and Argentina as it is cheaper than transporting corn from the Midwest region of Brazil, where the bulk of the country’s corn crop is grown.

The animal protein industry, a major consumer of corn feed, is concentrated in southern Brazil.

The first corn crop in Brazil is planted during September-December and harvested in February-May, while the second crop is planted in February-March and harvested in June-July.

The first corn crop accounted for 25% of Brazil’s total corn production in MY 2019-20.

The planting of first corn in the key states of Brazil, which accounts for 92% of the forecast area, reached 64% of the estimated area for MY 2021-22 as of Nov.13, compared with 56% a year ago, Conab’s crop progress report showed.

Although timely rains in the beginning of the MY 2021-22 season have encouraged farmers to expedite corn planting in southern regions of Brazil, dryness remains a concern across Mato Grosso do Sul, Sao Paulo, Parana, Santa Catarina, and Rio Grande do Sul.

In areas planted earlier, crops were showing signs of water stress and need rain as soon as possible to avoid yield losses, Brazil-based agriculture consultancy AgRural said in a report Nov. 15.

“Rain is expected to increase in southern Brazil tomorrow through Thursday, which should ease dryness a bit, but drier weather is expected to return to southern Brazil by the 6-10 day period, which will allow some dryness to linger,” Maxar said in a daily weather report Nov. 15.

S&P Global Platts

Tags: corn, Brazil, corn imports, corn prices, corn production, corn exports