Dec 02, 2019

Surging Corn Exports Result in Higher Corn Prices in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian National Association of Cereal Exporters (Anec) expects Brazil's corn exports in 2019 to be as high as 41 million tons, which would set a new record. If verified, the 2019 corn exports would be 80% more than in 2018. The prior record for corn exports was 30.7 million tons set in 2015. Anec attributes the increase to a weaker Brazilian currency, record corn production in Brazil, and strong international demand. Brazil is the second largest corn exporter in the world after the United States.

Mato Grosso is the largest corn producing state in Brazil and corn prices in the state are 52% higher than a year ago. The Mato Grosso Institute of Agricultural Economics (Imea) reported that the price of available corn supplies in Mato Grosso last week was in the range of R$ 29.51 per sack (approximately $3.30 per bushel). The higher prices are the result of strong demand from the ethanol sector and livestock producers, strong export demand, tight domestic supplies, and a weaker Brazilian currency. Farmers in Mato Grosso are holding back on selling the remainder of their corn and as a result, corn prices in November were up 8.2% compared to October.

One of the reasons for strong domestic corn prices in Mato Grosso is the expanding production of corn-based ethanol. There are a number of facilities already in production, more are under construction, and even more are in the planning stages. It is estimated that as much as 5 million tons of Brazilian corn will be used for ethanol production in 2020.

Small and independent livestock producers in southern Brazil are very worried about increasing corn prices and higher feed costs. The Vice President of the Agriculture and Livestock Federation of Santa Catarina (Faesc) indicated that he started to become very concerned in August when Brazil exported 7 million tons of corn in one month. The fear is now that local corn prices in Santa Catarina, which is a large livestock producing state in southern Brazil, could reach R$ 50 per sack or approximately $5.00 per bushel.