Apr 02, 2018

Brazil may Import Corn from U.S. and Argentina

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

The state of Santa Catarina is the largest hog producing state and the second largest poultry producing state in Brazil, but the farmers in the state cannot produce enough corn to meet the demand of the livestock industry. As a result, livestock producers in the state are looking for alternative sources of their corn supplies outside of Brazil. The main source of that outside corn is the United States and Argentina.

The state will need to import approximately four million tons of corn in 2018 to meet the domestic demand. The corn from the U.S. and Argentina would be imported directly into Santa Catarina. In fact, two vessels from Argentina are expected to arrive in Santa Catarina in the coming days with 60,000 tons of Argentine corn. The concern this year is that imports from Argentina may be limited somewhat due to the severe drought that has impacted nearly all the country. This could open the door for more imports from the U.S.

Brazil produces an excess supply of corn, but most of that corn is produced as a safrinha crop in central Brazil and a lot of that corn is exported out of Brazil's Norther Arc of ports. Transporting that corn 2,000 kilometers by truck from central Brazil to Santa Catarina is very expensive which sometimes makes Brazilian corn more expensive than imported corn. The safrinha corn crop represents approximately 70% of Brazil's total corn production and that crop will start to harvest in June. Until, then livestock producers in Santa Catarina are bidding up available corn supplies.

Corn is the main ingredient in the animal rations of more than 18,000 livestock producers in the state. Last week in the city of Chapeco, which is the center of hog production in the state, corn was selling for R$ 40 per sack (approximately $5.50 per bushel), which is R$ 10 per sack more than in January ($1.37 per bushel).

Farmers in the state continue to reduce their full-season corn production in favor of more soybeans resulting in an ever decreasing amount of corn produced in the state. Corn production in Santa Catarina is expected to decline 20.4% in 2017/18 to 2.4 million tons. Farmers in the state only planted 310,000 hectares of corn in 2017/18. Livestock producers would like farmers in the state to produce more small grains such as winter wheat which is used extensively for animal feed in other countries.