The volume of area to be planted in the second crop and next year’s exports will be key to the formation of corn prices in the Brazilian market, regardless of other indicators. In August we drew attention to the domestic demand issue, following the advance of Brazilian pork exports to China and the work start of new ethanol mills. In parallel, a jump in Brazilian exports compared to the highs posted on the CBOT in May and June, which led to a new level of shipments by Brazil. Therefore, 2020 begins extending this process from the second half of 2019, i.e. the combination of good exports in 2019 and weak summer planting in the 2019/20 season generates a more tense environment in the first half of 2020. Stocks appear high and sufficient, but they will need to be supplemented with imports.
The price highs registered in the second half of 2019 initially represent a high flow of exports. These exports derive from the sharp rise in CBOT prices in May and June, which made exports boom throughout the second half of the year. Prices at Brazilian ports went from BRL 34/36 to BRL 40/42 in May, in a year of record second season and selling interest. Therefore, the big export movement occurred at the height of the problems of the 2019 US crop.
Exports – Thus, we arrived in December with commitments of 39 million tons, already considering the shipments to be confirmed from January and December. We are raising the projection of shipments to 39.8 million tons this year, undoubtedly an excellent volume. Thus, the major factor supporting domestic prices and shrinking stocks projections in Brazil is the record export volume. Without this outflow of internal surpluses, price highs are always more limited.