Jul 29, 2021

Brazil's Corn Imports Could Triple in 2021

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

Brazil usually imports 1.0 to 1.3 million tons of corn per year with most of the imported corn trucked across the border from neighboring Paraguay, but 2021 has not been a usual year. The second crop of corn in Brazil, which represents about three quarters of Brazil's total corn production, was planted over a month later than normal, it then encountered a historic drought, and most recently, three waves of freezing temperatures over the past month resulting in drastic yield reductions.

Paraguay has also had a disappointing corn crop, so Brazil must now look to Argentina to supply the corn needed by livestock producers in southern Brazil. The meatpacker JBS has already purchased 30 vessels of Argentine corn and the food company Aurora Alimentos has indicated that they too will import corn from Argentina to keep their livestock operations functioning.

The Brazilian Foreign Trade Secretariat (SECEX) reported that Brazil has already imported 1.1 million tons of corn this year and that may increase to 3.5 to 4.0 million tons before the end of 2021.

The Port of Paranagua in southern Brazil is currently unloading the fourth corn shipment from Argentina. The vessel Ocean Royal arrived at the port on Wednesday with 32,000 tons of Argentine corn. Earlier, the vessel Aurora SB unloaded 35,319 tons in May, Sirius Sky unloaded 36,870 tons in June, and Interlink Nobility unloaded 30,530 in early July.

Corn from Argentina or the U.S. could arrive at Brazilian ports for R$ 90.00 to R$ 91.00 per sack (approximately $8.02 to $8.11 per bushel). There would be additional freight to get the corn to hog producers in the interior of Santa Catarina for example, but the Argentina corn would still be cheaper than corn brought in from other Brazilian states.

The Argentina Minister of Agriculture reported that during the first semester of 2021, Argentina exported 332,222 tons of corn to Brazil, which was up 900% compared to a year earlier. Some of the corn was shipped by ocean vessels and some of the corn was trucked across the dry border. During the first semester of 2020, Argentina exported 33,000 tons of corn to Brazil. In 2019 they exported 86,574 during the first semester and they exported 64,017 tons during the first semester of 2018.

Corn imports from Argentina are expected to pressure record high domestic corn prices in Brazil. Two things could change that scenario - a problem with U.S. corn production which would increase international prices, or a weakening of the Brazilian currency compared to the U.S. dollar, which would make corn imports more expensive.