Sep 20, 2021
Corn Shortage in Brazil Will Not End Soon
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The disastrous 2020/21 safrinha corn crop in Brazil has led to very tight domestic supplies and these tight supplies will probably remain in place until the 2021/22 safrinha harvest next June-July-August in spite of ramped up corn imports.
Southern Brazil does not produce enough corn to meet its domestic needs, so corn is generally brought in from other regions of Brazil. The states of Parana and Santa Catarina each will have to import 5 million tons of corn to meet domestic demand. The state of Rio Grande do Sul will have to import 4 million tons. So, collectively, the three southern states of Brazil will need 14 million tons of corn from other regions of Brazil or from neighboring Argentina and Paraguay.
The state of Parana is usually self-sufficient in corn, but that will not be the case in 2021. The combination of late planting, drought, and frosts reduced the expected 11 million tons of corn production in 2020/21 to closer to 5 million tons. The state of Santa Catarina will consume 7 million tons of corn, but the state only produced 2 million tons. The state of Rio Grande do Sul also came up short on corn production in 2020/21.
Conab is estimating the 2020/21 corn production in Brazil at 85.7 million tons which is down 16.4% from the previous year. The 2020/21 safrinha was planted later than normal, then it encountered a severe drought and early frosts resulting in a disastrous crop. Finally, massive front-loaded corn exports dried up the domestic market. The combination of these factors have led to domestic corn prices in Brazil as high as R$ 100 per sack (approximately $8.75 per bushel).
Local livestock producers in southern Brazil are set to import a record amount of corn from neighboring Argentina and Paraguay and they are encouraging farmers to plant more first crop corn even it comes at the expense of less soybean production.
Brazilian farmers are now actively planting their first corn crop and it looks like they will increase their corn acreage due to strong profit margins for corn production.
The first corn crop only accounts for approximately 25% of Brazil's total corn production and the eventual production will depend on the weather. Unfortunately, there is a 70% chance of another La Nina and dryer-than-normal weather in southern Brazil during October and November which could impact the corn during the critical pollination and grain filling periods.