Jul 15, 2021
Tight Corn Supplies to Support Brazil's Corn Prices Through 2021
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Corn supplies in Brazil are very tight due to an unpresented reduction in the 2020/21 safrinha corn production. The safrinha corn production is down approximately twenty million tons from initial expectations and it could decline further as the harvest progresses. Approximately, 20% of the safrinha corn has been harvested, but the harvest is just getting started in the states of Parana and Mato Grosso do Sul where the impacts from drought and frosts were most severe.
As a result, domestic corn prices in Brazil are expected to remain strong at least through the end of 2021 and maybe beyond. Brazil has already imported corn from Paraguay and Argentina, but tight corn stocks worldwide could limit the potential of future corn imports into Brazil. Most of Brazil's corn imports in 2021 have come from Paraguay, but drought and frosts have also reduced the corn production in Paraguay.
Anticipating the potential for more corn imports, Brazil eliminated the tariffs on corn imported from non-Mercosul countries, but even with that, imported corn from the U.S. for example is not competitive for livestock producers in the interior of southern Brazil, which is the center of Brazil's hog and poultry production.
The safrinha corn crop accounts for approximately three quarters of Brazil's total corn production with the remainder coming from the full-season corn crop in southern Brazil. The losses for the safrinha corn have been so severe, it is like losing the entire full-season corn crop.
Domestic users in southern Brazil are willing to out bid exporters for available corn supplies, and as a result, Brazil's corn exports in 2021 may end up being in the range of 20 million tons, which is more than 10 million tons below initial expectations.
The safrinha corn harvest is very late this year and it probably will not be completed until the second half of August. Farmers in southern Brazil will start planting their 2021/22 full-season corn in August and September. The 2021/22 safrinha corn crop will be planted in February and March of next year after the soybeans are harvested.