Porto Alegre, January 1st, 2021 – December was a month that surprised in terms of change in the profile of rain in the country. Even with La Nina, the rain restarted in the southern region and part of Argentina, remaining irregular in Mato Grosso and Matopiba. So, production losses in part of the South region are consolidated in the earliest crops while generating a more positive environment for other locations. The picture helps to slightly improve the view of such a high deficit in the first semester in domestic supply, however, it changes little in terms of domestic supply difficulties in the semester and the need for imports to regulate supply. Brazilian exports must close 2020 within the target of 34.2 million tons, almost 7 million tons below 2019.
The Brazilian corn crop has a known and irreversible situation, which is the loss of production in the South, more precisely in its western section. The early crop of Missões, in Rio Grande do Sul, and much of western Santa Catarina registered total losses, with crops partly converted to silage, with the harvest showing productivity levels of 20/30 bags per hectare. In other words, the losses are evident despite the fact that official bodies seem to ignore reality.
On the other hand, the rains in December and early January have contributed to the good development of crops in other locations in the South, Southeast, and Goiás regions, which have been normal. Good productivity potentials in these regions can be confirmed later on. The most delicate issue is the quite low planted area in general in Brazil’s Center-South and productivity outcome, which albeit satisfactory does not compensate for the lower area.
The 2021 second crop will be planted between February 10 and March 15 in most areas. A few crops will start before, others a little later, but within a window considered normal. The focus of the harvest, therefore, will be more concentrated from July, with few crops to be reaped in June and many in August/September. The acreage tends to confirm the profile of a new record.
Meanwhile, the domestic corn market begins 2021 within an expected environment. Seasonally, at this time, the harvest from the west of Santa Catarina and Rio Grande do Sul should be lowering prices in a general way in the region. However, what is noticeable is the absence of offers and new price surges. Offers range from BRL 83 to 90, and this has halted trading. The offers from Mato Grosso do Sul and Paraná have fallen significantly, and over-the-counter prices skyrocketed again at the end of December. Deals ended the week at BRL 79/80 in Paraná.
In the Southeast region, prices in general surged. The local market managed to replenish stocks in December due to seasonal selling pressure by growers. Now, stocks are being reduced, and consumers need to resume purchases. The point is that growers no longer have the December selling need and ask for higher prices. The local harvest will probably be available in São Paulo and Minas Gerais from March only, that is, in most cases after soybeans. Now, the soybean harvest occupies the entire internal logistics and with high freight rates. Thus, business jumped to BRL 80/82 in the interior of São Paulo and BRL 75/77 in Triangulo Mineiro, Minas Gerais.
In the Midwest, there was also a stronger movement between BRL 70/75 in Goiás, BRL 75 in Mato Grosso do Sul, and BRL 60/65 in Mato Grosso. Some sales with the second crop at BRL 50 in Mato Grosso and BRL 60 in Goiás. In the other regions, the selling pace of the second crop remains discreet.
In general, the corn market will try to manage the first semester in the best possible way for domestic supply. The most critical point seems to be February and March when the entry of the soybean harvest will make the corn flow quite complicated, and it is the moment when prices can really soar, perhaps even leading consumers to import. From April through June, the market will depend on several factors such as the start of the end of the regional summer, the second crop development, the international market, and the decision to import or not to close supply until the harvest of the second crop, at least.
2020 exports are expected to close this January and are within the target of 34.2 million tons in the business year, from February to January. In January, corn exports must close to 2.3 million tons after a good December shipment of 3.9 million tons. The data from Secex ended up getting higher, but due to the delay in export registrations in 2020. Therefore, there are no surprises for the closing of exports in 2020, which are staying nearly 7 million tons below 2019.