Domestic market of corn in Brazil remains very firm

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     Porto Alegre, September 1, 2020 – The attempt by the corn market to create an environment of pressure on domestic prices and/or to bring information to growers that the highs have ceased did not sound very well to the domestic price scenario. The composition of the information was bad for the domestic consumer sector itself. The information that the government would be eliminating the extra-Mercosur tariff on the imports of corn and other commodities was fully denied by the Minister of Agriculture last week.

     It was a terrible methodology to use wrong information to try to contain domestic prices or, worse, a measure that would by no means influence the domestic market or guarantee supply. It would be easier to speak to the President of the Central Bank to contain currency movements than to use an ineffective tariff as an argument for the price decline. And this kind of environment in a moment of planting decision for the corn summer crop, which will be discreet, can weigh even more on the Brazilian supply for the first half of 2021.

     As we have pointed out, there is no problem with the Brazilian corn supply until January. There is corn available across the country to meet the entire demand. What is happening is a completely atypical year that has reached everyone in a surprising way. Absence of soybean and soymeal offers in the domestic market, shortage of soyoil, cattle at BRL 240/arroba in São Paulo, pigs between BRL 7 and 8 a kilogram, live chicken between BRL 3.90/4.20 (against BRL 3.30 in 2019), and frozen chicken at BRL 5.00 (against USD 4.50 last year). All commodities have higher prices in reals in Brazil. This is a consequence of the devaluation of the real and high liquidity generated in the Brazilian economy, which can also be confused with inflation.

     Agência SAFRAS Latam

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