Production hits 100 million tons, but record exports sustain prices

Cepea, January 7, 2020 – Brazil produced and exported record volumes of corn in 2019. The higher international competitiveness of the domestic product attracted purchasers, speeding shipments in the second semester, reducing the domestic availability and underpinning quotes. In global terms, production increased.


The first crop was marked by the smallest area since the 1970s, at only 4.9 million hectares. Higher soybean profitability (soy competes with the cereal for area) influenced the area decrease for corn. According to data from Conab (National Company for Food Supply), the area in the 2018/19 first crop shrank 3.8%, while productivity increased 1.5%; the output, in turn, totaled 26.2 million tons, 2.3% down compared to that in the previous season.


In January 2019, 2018/19 initial stocks amounted 15.6 million tons, 13% smaller compared to that in the season before. Lower inventories and the area reduction in the first crop pushed up quotes in the first two months of the year.


Still considering the first quarter of 2019, most part of second crop planting activities ended within the ideal period. Perspectives for high supply in the second semester were reinforced by the favorable weather during crops development, pressing down quotes from March to May. Higher availability – because of the summer crop harvesting – influenced price drops.


The weather favored the development of the second crop. This scenario and investments on technology in the field resulted in a record production, of 73.8 million tons, 36.9% higher than that in the season before. According to Conab, area and productivity increased 9.3% and 25.3%, respectively, resulting in a record output of 100 million tons in Brazil.


The domestic availability (a result of production, initial stocks and imports) reached 116.9 million tons, a record and 18% more in relation to the crop before. The domestic consumption totaled 63.9 million tons, 6% up in the same comparison. As a result, the exporting surplus was the highest in history, at 53 million tons, 35% up compared to the previous season.


In early 2019, Conab indicated that 2018/19 exports (from February/19 to January/20) were likely to hit 31 million tons. However, during the season, estimates were revised up to 40 million tons. According to data from Secex, Brazilian shipments totaled 36 million tons (from Feb/19 and Nov/19), 125% more compared to that in the same period last year.


In case Conab’s estimates are confirmed, 2018/19 ending stocks (in late January/20) may hit 13.03 million tons, 16% lower compared to that in the season before and 3.7% below that over the last three crops. As a result, the 2018/19 season may end with lower availability compared to that last crop.


In 2019, the ESALQ/BM&FBovespa Index for corn (Campinas/SP) rose 24.9%, at 48.62 BRL (12.11 USD) per 60-kilo bag on December 30.





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