Cepea, July 18 2019 – Corn prices had opposite behaviors among the Brazilian regions surveyed by Cepea in the first fortnight of July. On the one hand, the harvesting pressed down quotes, on the other hand, the fast exports pace underpinned quotes, mainly at ports.
Many purchasers left the spot market in that period, since they are waiting for the product previously purchased to be delivered. Besides, agents have been attentive to Conab’s (National Company for Food Supply) estimates indicating new records for corn production and exports in Brazil. In that scenario, liquidity was low.
In São Paulo, the lower interest from purchasers pressed down quotes. On July 15, the ESALQ/BM&FBovespa Index closed at 37.20 BRL (9.90 USD) per 60-kilo bag, 4.2% down compared to that on June 28.
At B3, corn contracts dropped in the first half of July, influenced by the possible higher supply. A report released by Conab on July 11 indicated that the area sown with corn in the 2018/19 was smaller than that reported in June (4.9 million hectares), but the average productivity is higher, mainly due to the results from Rio Grande do Sul and northeastern Brazil. Thus, the average Brazilian productivity is estimated at 5.33 kilos per hectare, and production, at 26.15 million tons, 2.5% lower than that in the previous season.
The second crop production, however, was revised up to 72.35 million tons, 34.2% higher than that in the previous season and a record. This increase reflects the good weather conditions during most of the season. Data indicate that the area to be sown may increase by 7.1%, to 12.35 million hectares in 2018/19. While the area allocated to corn should shrink in southeastern Brazil (São Paulo), it should grow in the remaining regions. So far, productivity is estimated at 5.8 kilos per hectare, 25% higher than that last year.
If these estimates are confirmed, the Brazilian corn production in the 2018/19 season should reach 98.5 million tons, a record. Thus, the domestic availability (initial inventories + production + imports) may reach 114.6 million tons, the highest in all times.
Concerning consumption in Brazil, Conab kept estimates at 62.91 million tons. Exports were revised up to 33.5 million tons, resulting in ending stocks at 18.19 million tons in January 2020, a record.
GLOBAL PRODUCTION – The USDA has revised up the global corn supply by 0.5% compared to that previously reported, to 1,105 billion tons. Global consumption, in turn, is forecast at 1.134 billion tons.