With Brazilian exports of corn and soybeans expected to continue their strong performance in 2014, last year’s problematic port logistics are reccurring.
Recent data released by Brazil’s Ministry of Development, Industry, and Foreign Trade shows that the South American country exported 3.8 million tons of soybeans in September and 3.44 million tons of corn – both are records for the period. From January to September, soybean exports reached 40.7 million tons, already overtaking the output of 2013 in just nine months.
Luís Fernando Cirne Lima took office as a minister of Agriculture of Brazil in 1969 during military rule. At the time, Brazil was not within the 20 largest economies in the world and coffee accounted for nearly half of the total exports of the country. The South American country also did not produce over a million tons of soybeans. As of today, Brazil is the top producer of soybeans in the world, a major player of corn production, and the seventh largest GDP.
U.S. farmers looking for a fundamental factor to turn the corn market around may find one in South America.
On Monday, the corn market hit a three-year low. With the U.S. harvest ramping up, the corn market remains under heavy price pressure.
Though it may be a longer term price supporter, Argentina's corn output is expected to drop in 2013-14.
A recent projection by Agritrend, a consultancy from Buenos Aires, estimates Argentina's corn area at 7% smaller in the 2013-2014 season. The total area for the cereal would fall in that country to 10.1 million acres.
Due to delayed plantings in February, the harvest of Brazil's second corn crop (safrinha) is slow to finish, according to Brazil's National Supply Company (Conab).
The rains of February have impeded early works. Currently, the country has reached over 95% of the safrinha harvest.
The last Conab report estimated 46.1 million tons for the second corn crop, which is a new record. In the previous season, Brazil had harvested 39.1 million tons of its winter crop.
Consumption is likely to increase in Brazil in 2013 in almost every sector. The food sector is not an exception, but one of the main beneficiaries of the expansion. The U.S. could potentially benefit from that increased consumption by exporting an increased amount of wheat to South America's most populated country. Yearly, Brazil imports approximately 7.5 million tons of wheat, and imports have more than doubled in three years.
The scenario that could potentially boost imports from the U.S., however, is not consumption expansion in Brazil, but trade policies from Argentina.