Brazilian corn market maintains the stance of successive increases in the middle of August

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     Porto Alegre, August 25, 2020 – The Brazilian corn market maintains the stance of successive increases in the middle of August. This is not a new fact, but it was registered only in years of strong exchange devaluations and/or situations of production losses in some major global growers or consumers. A spontaneous high like the current one, with few big bullish indicators and at full harvest of a good second season, really surprises. We have already pointed out the factors for this scenario and day by day the growers’ retention becomes a more consolidated factor for such increases.

     On the other hand, exporters and the consumer sector also have their share of responsibility in this price curve due to the strategies of each one. With sharp increases, the issue of imports appears again in the Brazilian market, an issue that would only be dealt with in 2021 but has been brought forward to 2020. The international market is open, there is no restriction on purchases. This is not a matter of releasing imports or not from certain sources, but the import cost. And at this point, the exchange rate is the central point.

     The domestic corn market reached record prices for this period of the year. In March, prices reached BRL 62/63 CIF in São Paulo region, but prices reached these levels in mid-August, the harvest period for a good second crop in 2020. We have already pointed out in our last newsletters what has led prices to this movement. However, some points seem fundamental:

     – The need for physical product from trading companies;

     – Light selling pressure by growers at full harvest;

     – The strategy of few purchases by internal consumers;

     – Capitalization by growers;

     – Strong exchange rate volatility.

     Agência SAFRAS Latam

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