The environment for the internal commercialization of corn continues with its profile of very firm prices and disputed regional supply. In 2016, during this period, the domestic market had already decided on massive imports of Argentine corn and sought to reach the second-crop corn with this high volume of imported product. As of July, prices fell reasonably, and the picture culminated in a 16/17 cycle of lower prices and high stocks. In 2020, the market has not bet on imports and practically ignores the scenario of production losses in Rio Grande do Sul. Without imports, domestic supply depends on regional supply, which feeds prices. Pay attention now to the climate situation in March and May, with a drastic reduction in rainfall for second-crop corn.
In 2016 Brazil experienced its worst supply situation in the first half of the year. The sharp high at the beginning of the year showed the domestic market there would be supply problems. That year, carryover stocks amounted to only 2 million tons, and government stocks would not be able to meet all immediate domestic demand. The option for consumers was to seek imports immediately to meet their domestic demand in the first half, with a good part of the volumes reaching the Brazilian market at the same time of the harvest of the second season. Brazil imported more than 3 million tons that year.
In 2020, the domestic market plays with an adjusted supply, betting it is possible to go on with the volume of product available internally without leveraging purchases of Argentine corn at high prices like the current ones. Carryover stocks are larger, with nearly 9 million tons, which have already been practically consumed in the first two months of the business year. Now the market needs to supply itself with the available regional product. The total supply for the semester is 30 million tons against a consumption, if adjusted, of 35 million tons. Note that the housing of breeder chicks in January was the largest in history, with 572 million head. Therefore, domestic demand remains firm regionally, and there is little room for immediate changes in this environment.