Growers stay away from the market and prices rise in Brazil

Cepea, October 17 2019 – Corn prices increased in the Brazilian spot market in the first fortnight of October, boosted by growers’ retraction. These sellers are waiting for quotes to rise more sharply, based on the weather, the fast exports pace and the firm demand.

 

On October 15, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) closed at 41.44 BRL (9.97 USD) per 60-kilo bag, one of the highest levels observed in 2019 and 7.1% up in the fortnight.

 

FIELD – Brazilian farmers are currently focused on soybean sowing, but low rains in most producing regions have been a concern – thus, growers are worried about missing the ideal period for sowing the second crop corn. Farmers are also concerned about the development of the crops already sown in Paraná, Rio Grande do Sul and São Paulo.

 

In Paraná, sowing has reached 69% of the state area, and most crops are in good conditions, according to data from Seab/Deral released on October 7. In Rio Grande do Sul, the area sown has reached 58%.

 

EXPORTS – In September, Brazilian corn shipments totaled 6.5 million tons, 93% up compared to that in Sept/18 and a record for the period, according to data from Secex. Between January/19 and September/19, national exports reached 29.4 million tons, 142% up compared to that in the same period last year.

 

In the first four working days of October, Brazil exported 1.3 million tons of corn, according to data from Secex. The daily average of shipments is at 328.6 tons; Thus, if this pace continues until the end of the month, Brazil may ship 7.55 million tons in October, two-fold that exported in Oct/18.

 

The good exports performance largely reflects the faster trading pace for corn in Paraná and Mato Grosso do Sul in previous months – sellers were encouraged by higher price levels.

 

CONAB – Conab (National Company for Food Supply) estimates Brazil to export 38 million tons of corn in the 2018/19 crop, a record. Still, the high Brazilian production in the second crop has kept ending stocks at 14 million tons, enough to supply the domestic market in the current offseason period. As for the output in the 2019/20 crop, it may be three million tons smaller than that in the previous crop, and exports, four million tons lower.

 

So far, the summer crop output is expected to increase slightly. First estimates point to a slight 1% increase in the area, to 4.1 million hectares, and to a productivity increase (1.5%), to 6.3 tons per hectare. Thus, the Brazilian corn output is estimated at 26.3 million tons – it is worth to mention that the summer crop production in the 2018/19 crop totaled 25.6 million tons.

 

For the 2019/20 second crop, the domestic production is estimated at 70.9 million tons, 3.1% lower than that in the previous crop, due to the area stability and the 3.1% decrease in productivity compared to that in the previous season.

 

(Cepea-Brazil)

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