Strong retention of corn supports prices at harvest of second season

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     Porto Alegre, July 28, 2020 – The year 2020 has really brought some variables that are outside of the natural rules of markets and their seasonality. Stock exchanges do not fall sharply despite the global economic situation. Currencies with an uncertain trajectory in the face of the immense variables present in the economy and politics. Commodities try to find positive demand factors to inhibit greater pressure on prices. The clear characteristic of this pandemic year, without a doubt, is still the instability in all the market variables. In the midst of this situation, a more difficult electoral process in the United States is combined with growing political struggle with China, shaking the expectations towards the economic environment in this second semester and, mainly, in the U.S. post-election. Besides, some importers try to fit Brazil to the rules imposed from the outside and without evaluating the Brazilian reality, with regard to the environment, at the same time that we have foreign companies across the Amazon building ports, exploring wood, minerals, and transport logistics, besides countless NGOs. Amid all this uncertain picture, the harvest of Brazil’s 2020 corn crop is advancing and with surprisingly firm prices. Partly, maintaining the derivation from port prices, still firm, partly due to the initial excess of corn retention by growers. Excess exports generally affect the future domestic supply. Excess retention guarantees the future internal supply.

     The global economic scenario continues with a dispersed environment between the stock exchange movement and the real economy. As the pandemic continues to advance, especially in the Americas, economic aspects continue to limit a more optimistic short-term vision. Last week, the European Council approved a budget of around 1.0 trillion euros for 2021-2027 and the bailout of 750 billion euros, from which 390 billion euros in subsidies and the remainder in loans to the countries most affected by the pandemic. The proposal reduces the subsidies initially suggested by the European Commission, of 500 billion euros. The U.S. Congress may pass an additional stimulus of USD 1 trillion for its economy.

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