Jan 27, 2022
Corn Supplies in Brazil to Remain Very Tight Through at Least June
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The livestock industry is concentrated in southern Brazil where there is always a corn deficit. Livestock producers in the states of Santa Catarina and Rio Grande do Sul usually import their needed corn supplies from states such as Mato Grosso and Goias in the center-west region of Brazil where most of the corn is produced as a safrinha production after soybeans.
Parana is also a large livestock producing state, but the state generally produces enough safrinha corn to meet the state's domestic demand.
Last year, late planting, dry weather, and early frosts severely impacted Brazil's first crop corn production and the safrinha corn production to such an extent, that there was not enough corn to meet the needs of livestock producers in southern Brazil, As a result, they imported over 3 million tons of corn from Argentina and Paraguay to keep their operations up and running.
The current situation in southern Brazil looks eerily like last year. A severe drought coupled with record high temperatures have greatly reduced the first corn crop which is primarily grown in southern Brazil. As a result, the states in southern Brazil will be forced to import large amounts of corn from central Brazil once the safrinha crop starts to be harvested in June.
Authorities in the state of Santa Catarina estimate that the corn production in the state will be down 43% compared to initial estimates to approximately 1.5 million tons. The domestic demand in the state is approximately 7 million tons, so the state will need to import about 5.5 million tons of corn.
Rio Grande do Sul was expected to produce 4-5 million tons of corn, but the drought has reduced that number to approximately 2.5 million. Therefore, the state will need to import 1.5 to 2.5 million tons.
Combined, the livestock industry in southern Brazil will need to import at least 8 million tons of corn in 2022 to keep their operations functioning. Most of that corn will come from the safrinha crop, but it will not be available until at least June. Between now and then, domestic corn prices in Brazil will remain near record high levels due to the tight supply.
If the safrinha crop end up being disappointing like last year, livestock producers in southern Brazil may need to import corn once again from Argentina and Paraguay. Approximately 75% of Brazil's total corn production comes from the safrinha crop.