Weak demand and international devaluations press down quotes in Brazil

Cepea, April 17, 2020 – The high price levels for corn in the Brazilian market added to uncertainties related to the covid-19 pandemic led purchasers to slow down the purchasing pace for new corn batches, mainly for large amounts. This scenario and international price drops for corn pressed down quotes in Brazil in the first fortnight of April.

 

In the United States, gasoline devaluations and the covid-19 pandemic have been limiting the demand for corn – it is worth to mention that the production of corn ethanol is high in the USA.

 

In Brazil, prices dropped more sharply in São Paulo and in areas from central-western Brazil. Between March 31 and April 15, the ESALQ/BM&FBovespa Index dropped a steep 13.2%, closing at 52.20 BRL (9.97 USD) per 60-kilo bag on April 15.

 

CROPS – Data released by Conab (Brazil’s National Company for Food Supply) on April 9 indicated that the output from the 2019/20 crop should total 101.86 million tons, 1.8% up compared to that in the previous season. As regards the second crop, productivity was revised up by 0.6% compared to that previously reported, to 5.6 tons per hectare. Thus, production was revised up by 3.1% compared to that last season, to 75.43 million tons.

 

As for the summer crop, Conab revised down production estimates to 25.27 million tons, 1.5% lower than that in the previous year. This is linked to the crop failure in Rio Grande do Sul, the number one producing state in Brazil – the output is now forecast at 4.11 million tons, 28% lower than that in the previous season. For the third crop, estimates were kept at 1.56 million tons.

 

Exports estimates were revised up to 34.5 million tons, imports estimated were kept stable, at a million tons. Domestic consumption was kept at 70.45 million tons, but ending stocks in Jan/21 should be 18% lower than that in the previous season.

 

EXPORTS – In March, Brazil exported 494.6 thousand tons of corn, 42% more than that in February, but 50% less than the amount shipped in March/19.

 

(Cepea-Brazil)

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