Brazil Corn Exports Set to Surge Just as World Needs Them Most

The bumper corn harvest from Brazil couldn’t have come at a better time for global food supplies as calamities from war to drought stymie exports from the world’s biggest producers.

Corn exports from South American’s biggest nation are on pace to more than double this year to a record 44 million tons, according to Brazil’s grain exporter group Anec. Shipments have accelerated since October, when low-water levels in the Mississippi River snarled US exports.

“Brazil has been a savior for tight grains market,” said Vinicius Ito, director at Marex North America in New York. Brazil is already a leader in the soybean market and is gaining relevance in the corn trade as a global shortage of the grain has created an opportunity for the nation to fill the void, he said.

Brazil’s monster crop has been key to containing corn prices as shipping bottlenecks in the US and war in Ukraine — the world’s first and fourth-largest suppliers, respectively— leave grains stranded. Corn futures have declined almost 20% since the year’s peak in late April, partly due to higher output in Brazil, a welcome reprieve for consumers who have grappled with surging food costs as Russia’s war upended global trade patterns.

Please see below the track record of the volume of corn (hs 1005) exported from Brazil to all destinations between Jan 2019 and Oct 2022. The data is from DataLiner.

Brazilian corn exports | Jan 2019 – Oct 2022 | WTMT

Source: DataLiner (click here to request a demo)

While consumers benefit from Brazil’s fortuitous harvest, US farmers have reason to worry. The US is losing market share to Brazil and others like Argentina and Ukraine, which has been able to remain among the top-five biggest corn shippers even as Russia’s invasion curbs exports from the Black Sea. Unlike the US, Brazil has room to grow even more crops.

“What helps Brazil the most is it can still expand its total arable land base, which can’t be done in the US,” said Ben Buckner, chief grains analyst for AgResource Co. Brazil also still benefits from reduced labor costs and a weaker currency, he said.

In the starkest reflection yet of the threat Brazil presents to US growers, China, the world’s largest corn importer, recently decided to start buying Brazilian corn as a means of reducing dependence on the US. The US accounted for about 70% of China’s purchases in the 2020-2021 season, and this dominance is expected to diminish as hundreds of Brazilian facilities have been cleared for exports.

Brazilian corn is cheaper than that of the US for the next three months, when grain exporters usually prioritize soybean shipments. However, Brazilian farmers, who still have about 19 million tons of the current crop to be sold, can unleash their bounty onto the market whenever prices and currency fluctuations make it attractive enough for them to do so, according to Daniele Siqueira, an analyst at AgRural.

Next year, the US Department of Agriculture estimates that Brazil could export as much as 47 million tons, inching closer to the US’ forecast of 52.7 million.

Source: Bloomberg News

To read the full original piece, please access: https://www.bloomberg.com/news/articles/2022-12-19/record-corn-crop-in-brazil-vital-to-keeping-food-prices-in-check?leadSource=uverify%20wall

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