Brazil’s corn exports on the way to recovery

The Brazilian corn market is expected to face lower prices and port differentials in 2022, driven by an expected record output.

Production of the 2021-22 crop is expected to reach 117.2mn tonnes (t), up by 34.6pc from 2020-21, according to the national supply company (Conab). The estimated area for corn is 20.9mn ha, up 5.1pc from the previous crop. Corn exports in 2022 are expected at 36.7mn t, which could bring Brazil back to levels that were seen in recent years.

Market participants expect strong competition between Brazil and Argentina in corn exports next year, another factor that may put downward pressure on premiums. Brazil’s summer crop was partially affected by the lack of rain, but losses in production potential will be offset by higher productivity in the second crop, which is the largest in the country.

If the projections are confirmed, Brazil will have a very different year than 2021. Brazilian corn exports may end 2021 at the lowest level of the last 10 years, since the last time the country shipped less than 20mn t of corn was in 2011. From January to November this year, 17mn t of corn were exported, compared with 29.6mn t in the same period last year.

In the Santos Tubarao cargo market, the main corn export route, which is assessed by Argus, there was an atypical premium curve throughout 2021. For most of the year, domestic corn prices were higher than prices at Brazilian ports. In some locations by mid-year the price was up to $50/t higher than at the port. The highest premiums for December shipment were reached in the first half of October, when values were close to 150¢/bu over the CBOT.

Market participants consider the year atypical for two reasons. Firstly, a crop failure in Brazil made exports plummet throughout the year. And secondly, a sudden increase in deals occurred between November and December amid the “perfect storm” of a delay in the Black Sea harvest, problems with drought in Argentina and logistical difficulties in the US after the passage of Hurricane Ida. The combination of factors made Brazilian corn more competitive for buyers such as Morocco, Egypt and North Africa. Those shipments were made through the northern Brazilian ports, which have been gaining space in Brazilian exports, although the ports of Santos and Tubarao still account for almost 43pc of corn shipments.

The Brazilian Association of Cereal Exporters (Anec) forecasts the shipment of 3.47mn t in December. If the forecast is confirmed, Brazil would reach 20.7mn tons in the year, the same level recorded in 2014. Conab’s forecast is less optimistic, considering that 2021 should total 19.2mn t, which could confirm the lowest volume of the last 10 years.

Another highlight of 2021 was the increase in corn imports into Brazil. The volumes acquired from other countries should total 2.7 mn t, according to Conab’s projection, representing the highest level of the last six years. In 2020 Brazil imported 1.37 mn t.

Argus Media

Tags: Morocco, Egypt, corn, export, Brazil, Argentina