Cepea, March 18, 2020 – Corn prices continued on the rise in the Brazilian market in the first fortnight of March, hitting new nominal records in all Cepea series (ESALQ/BM&FBovespa Index). The boost came from the low supply and firm demand in the domestic market. Although the harvesting of the summer crop corn is advancing in southern Brazil, due to the favorable weather, many corn growers prefer to trade soybean rather than corn, limiting supply.
Between February 28 and March 13, the ESALQ/BM&FBovespa Index (Campinas, SP) rose a staggering 8.1%, closing at 57.58 BRL (11.87 USD) per 60-kilo bag on March 13 – on March 12, the Index closed at 57.59 BRL (11.95 USD) per 60-kilo bag, a new nominal record in all Cepea series, which started in 2004 for this product.
At ports, deals were not closed in the spot market in the first half of the month, since sellers have opted for trading corn in the Brazilian market, where prices have been higher.
CROPS – Sowing of the second crop corn is almost over in Mato Grosso, having reached 97.98% of the total estimated area, according to data from Imea. Cepea collaborators indicate that the sowing delay in some regions are concerning agents, since the ideal period for the activity to be concluded ended in February.
In Paraná, corn growers are concerned about the weather, since low rains and high temperatures may reduce productivity. Until March 9, the summer corn harvesting had reached 57% of the total production, according to data from Seab/Deral. As for the second crop sowing, it has reached 84% of the area.
In Rio Grande do Sul, the dry weather is favoring the harvesting, but limiting productivity. According to Emater, 57% of the area had been harvested until March 12.
ESTIMATES – According to a report released by Conab (Brazil’s National Company for Food Supply) on March 10, the Brazilian corn production in the 2019/20 season is estimated at 100.08 million tons, 0.4% lower than that estimated in February, due to the smaller area allocated to the second crop, now forecast at 11.65 million hectares.
For the first crop, despite the larger area, the lack of rains during crops development kept production estimates at 25.56 million tons. As regards the second crop, the delay in soybean sowing may reduce the corn area. Besides, productivity is forecast to be 1.8% lower than that in the previous season, leading to an output of 73.36 million tons. The third crop (in northeastern Brazil), in turn, should produce 1.15 million tons.
As exports are predicted at 34 million tons, by the end of the season, only 8 million tons should be left, the lowest volume in the past years.
Conab expects consumption to increase in Brazil, by five million tons, compared to that in the previous crop, now to 70 million tons. Imports are estimated at a million tons. Thus, in the 2019/20 crop, the exportable surplus in Brazil (initial inventories + production + imports - domestic consumption) would be around 42 million tons.
As for the world corn production, the USDA revised up the estimates to 1.11 billion tons, due to the higher supply in African countries. However, consumption should decrease to 1.13 billion tons. World inventories decreased 20 million tons, to 297 million tons.