Still concerned about the weather, farmers limit supply; price continues firm

Cepea, May 18, 2021 – It rained in some corn-producing regions in Brazil in the first fortnight of May, however, the volume was low, and farmers are still concerned about the water deficit, majorly in Paraná, Mato Grosso do Sul and in some areas in the southeastern region of the country.

 

Thus, sellers are watching for the effects of the weather on crops productivity, limiting corn supply in the Brazilian spot market. In the first half of May, many purchasers that needed to replenish inventories for the short term ended up paying higher prices for the product.

 

In this scenario, prices increased in that period in most of the regions surveyed by Cepea. Between April 30 and May 14, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) rose by 1.6%, closing at 101.34 BRL (19.23 USD)/60-kilo bag on May 14.

 

CONAB – In the second week of May, Conab (Brazil’s National Company for Food Supply) released a report estimating the average productivity of Brazilian corn crops to be 3.3% lower than that in the previous season. This result in largely linked to the lower yield in southeastern (-3%) and southern (-4.9%) Brazil. Agents consulted by Cepea expect productivity estimates to be even lower in the next report, based on the unfavorable weather in Brazil.

 

The output of the first crop is estimated at 24.67 million tons, 3.9% down from that in the previous season, also due to weather issues. For the second crop, the output is forecast at 79.79 million tons, 6.3% up from that in the previous season, but 3 million tons lower than that reported in April/21 – these data may be adjusted, since the weather has been unfavorable to crops, and nearly 35% of the crops were sown out of the ideal period.

 

As regards the third crop, which is forecast to begin this month, Conab estimates the output to total 1.93 million tons, 5.1% higher than that in the previous season. This increase in related to the larger area allocated to the third crop.

 

Considering the first, second and third crops, Conab estimates the Brazilian corn output to total 106.41 million tons, 3.7% up from that in 2019/20. As for the domestic demand, Conab forecasts it to set a record, at 72.14 million tons; exports are estimated at 35 million tons. Thus, ending stocks may total 10.86 million tons, similar to that in the previous season (10.6 million tons).

 

CROPS – Low rainfall allowed the harvesting to continue in Brazil. According to Seab/Deral, only 2% of the summer crop still needs to be harvested. As regards the second crop, 99% had been sown until May 10.

 

In Rio Grande do Sul, the harvesting did not advance much in the first half of May. According to a report from Emater released on May 13, the harvesting of the summer crop has reached 85% of the state area.

 

(Cepea-Brazil)

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