Aug 19, 2021

High Corn Prices to Persist in Brazil for at Least Next 6 Months

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

Safrinha corn yields in southern Brazil have been extremely disappointing due to drought and frosts, but the near record high prices for corn will help to compensate somewhat for the low yields. The dilemma for Brazilian farmers is should they sell their corn to take advantage of the strong prices, or should they hold back some of their corn for potentially even higher prices in the future.

Large livestock producers in southern Brazil are importing corn from Argentina and Paraguay in order to keep their facilities operating. These imports have helped to stabilize local corn prices.

The price of imported corn in the interior of Brazil has stabilized at approximately R$ 95.00 per sack (approximately $8.50 per bushel) according to the consulting firm TF Consultoria Agroeconomica. Smaller end users who do not have access to the imported corn, are paying more for corn in the range of R$ 100 per sack (approximately $8.90 per bushel).

The cost of producing safrinha corn in Parana is approximately R$ 59.63 per sack (approximately $5.30 per bushel) according to the Department of Rural Economics (Deral), so TF Consultoria Agroeconomica is recommending to farmers to sell some of their production and pocket a hefty profit of 40.6%.

The high prices for corn are expected to persist for at least the next six months because of the corn deficit in southern Brazil where the livestock industry is concentrated. The corn deficits are expected to be 5 million tons in Parana, 5 million tons in Rio Grande do Sul, and 2 million tons in Santa Catarina, or a total of 12 million tons that must come from other Brazilian states or imports. The next full-season corn harvest will not start in Brazil until sometime in January.

In the meantime, imported corn from Argentina will arrive at end users in Rio Grande do Sul and Santa Catarina for about R$ 93.80 per sack (approximately $8.40 per bushel), or 9.7% less than local corn.