Drought in Ukraine opens window for Brazilian corn exports to the EU

Corn exports from Brazil to the European Union (EU) rose more than 80% year-to-date through August as shipments doubled last month. Currently, Europeans rely on Brazilians to balance the decreased offer of Ukrainian grains, informed market insiders.

With the EU corn harvest drastically reduced owing to the drought, trade between Brazil and Europe will probably remain above average in the following months. At the same time, Ukrainian exports to European nations are uncertain.

“The point is that Ukraine will not be able to meet all of Europe’s corn demands; Brazil may be well fitted to fill a portion of this gap in the coming months. We have significant stocks to trade,” S&P Global analyst Gabriel Faleiros told Reuters.

See below the track record of the volume of corn (HS 1005) exported by Brazil from January 2021 to July 2022. The data is from DataLiner.

Brazilian exports of Corn | Jan 2021 – Jul 22 | WTMT

Source: DataLiner (click here to request a demo)

Corn exports from Brazil to the European Union increased by 82.6% to 3.67 million tonnes between January and August compared to the same period last year, a faster rate than the average for all destinations (79.6%), as Brazil is enjoying a good second corn crop this year. Conversely, drought and frost caused a severe drop in 2021.

August accounted for most of the year’s shipments from Brazil to the EU, with 2 million tonnes, double the total shipped in the same period last year, according to data from the Ministry of Agriculture.

The S&P Global analyst said that the months with the highest grain shipments from Brazil to the EU are typically July and August. Still, the European climate situation might boost the activity of the corn industry.

“Another factor is the historic drought and heat waves impacting grain output in Europe, decreasing estimations; we have crops in France in the poorest condition for at least the previous seven years,” he added. “We are certainly expecting increased imports from Europe as a result of that.”

Corn

Brazil has been the second largest supplier of corn to the European Union, behind only Ukraine, which usually gains prominence from November as an exporter to the EU, until the first months of the following year, the analyst recalled.

“Every time there is a crop failure in Eastern Europe due to the weather, the EU ends up helping itself with Brazilian corn,” exemplified the director general of the National Association of Cereal Exporters (Anec), Sérgio Mendes.

MARS, the European Union’s agricultural monitoring agency, lowered its summer crop projections again on the 19th, stating that rainfall in many regions of the union was insufficient to restore the damage caused by the country’s dry and hot weather.

MARS put its yield outlook for the European Union corn crop, which will be harvested in the autumn in the Northern Hemisphere, at 6.39 tonnes per hectare (t/ha), down from the 6.63 t/ha projected last month and now 19% below the 2021 level and the five-year average.

Ukraine factor

Faleiros of S&P Global said Russian President Vladimir Putin’s comments about shipments of Ukrainian corn through the agreed UN corridor underscore concerns about whether Ukraine will be able to maintain shipments to the EU.

Putin criticized that the exports serve rich countries, including Europeans, not developing ones or poorer nations in Africa.

“We know that the agreement with Russia is at risk, and Putin has already shown dissatisfaction… it seems to me that there are uncertainties about the continuity of the agreement.”

Frederico Humberg, head of trading company Agribrasil, believes that as exports from Ukraine to the EU “regularize,” Brazil’s relevance as a supplier to the bloc will diminish.

“Essentially, the rise in maize exports from Brazil to Europe was attributable to limitations on Ukraine, EU’s primary supplier; this provided a window of opportunity for Brazil,” Humberg explained.

Source: Money Times

To read the full original article, please go to: https://www.moneytimes.com.br/exportacao-de-milho-do-brasil-para-ue-dispara-e-pode-seguir-firme-com-seca-e-ucrania/

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