Brazil corn exports grow between May and June

Brazil, the world’s second-largest producer and exporter of corn after the US, is quickly accelerating its corn exports this year amid a strong domestic harvest and the expectation of a drop in US corn production.

The country exported 2.4m tons of corn between May and June this year, which is significantly higher than the export average of 343,415 tons during the same period in the last six years, according to official data.

In the period from May to June, Brazil’s corn exports are generally the lowest. However, the amount of corn exported in these two months this year indicates that buyers are actively pursuing this alternative market.

In addition to record production, early harvest and higher US grain prices are also pushing South America’s exports above its usual pace.

Vietnam, Japan, and South Korea were the main buyers of Brazilian corn during this period, according to data from the Ministry of Industry, Foreign Trade, and Services.

According to the Food Supply and Statistics Agency (Conab), the country should produce a record of 98.5m tons of corn in 2018-19, but even if we take into account the larger production, the Brazilian corn exports from the last two months are considerably larger.

When Brazil’s corn output was at the earlier high of 97.8m tons in 2016-17, corn exports stood at 873,200 tons from May to June 2017.

Brazil’s 2018-19 business year, as defined by the US Department of Agriculture, began in March 2019 and will end on February 2020.

In addition, during the first two weeks of July, corn exports had already reached 1.88m tons, while at the same time in July 2018 they totaled 1.2m tons.

The US is likely to produce 352.44m tons of corn in 2019-20, compared to 366.29m tons in 2018-19, according to the latest data from the USDA World Agricultural Supply and
Demand Estimates.

Initial harvest in Brazil

Another factor behind the increase in Brazilian exports is the anticipated harvest of corn. As a result, a lot of corn is available in the market.

The second corn crop in Brazil is usually planted between February and March after the soybean harvest and its harvest begins between July and August.

But early harvesting of soybeans this year encouraged farmers to plant corn safflower at a record pace several weeks ahead of the normal schedule and within the ideal planting window.

“The main reason (for high exports) is related to the early harvest of the second corn crop- just to put into perspective, Mato Grosso and Paraná started the harvest in May, reaching 3.5% and 3% of the areas harvested respectively – they usually start in June”, said Victor Ikeda, senior analyst at Rabobank Brazil. “This has resulted in having a corn volume available for export earlier than last season,” he added.

Price Competitiveness

According to Rabobank analyst Ikeda, Brazilian corn export prices in the port of Paranaguá are 10% lower than those of the port of New Orleans in the USA.

The record high in Brazil and Argentina should also keep global corn prices under pressure, according to market participants.

“The highest production in the Brazilian and Argentinean histories has been the main reason that is limiting a strong upward trend in prices,” said Ikeda.

The following DataLiner graph shows corn exports trends of Brazil per quarter, beginning from the Q1 2014:

Source: S&P Global

Sharing is caring!