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Brazil Harvests Record-Large Corn Crop, Soybean Sales Slow

Corn stored on the ground faces quality issues.

SAO PAULO, Brazil-- As Brazilian farmers wrap up the harvest of their second corn crop of the year, record monthly exports are being recorded to curb storage issues.

Meanwhile, soybean farmers are slow to sell this year’s crop, due to low profit margins.

For July and August, Brazil’s corn exports have hit record levels. From the size of this year’s total corn crop, it’s necessary for Brazil to keep the corn moving along the production and shipping cycle.

Brazilian producers have already harvested 89% of the area planted with corn in the second crop 2016/2017, according to survey AgRural released on August 18. A long period without rainfall in the main producing regions favored the corn harvest, which is faster in comparison with 82% harvested over the last four years.
In Mato Grosso, the largest producing state, the harvest reached 99%. According to AgRural, there are reports of corn stored on the ground, due to a shortage of storage. In case of rain, the producers can register quality losses. However, there are still no estimates on the volume of corn stored under these conditions and if there are losses due to the rains recorded between August 18 and 21.

Record production

Brazil harvests a huge corn crop. The National Supply Company (Conab) estimates production of 30.5 million tons in the first harvest and 66.6 million tons in the second harvest. The estimate indicates a 46.1% increase in total corn production, with 97.1 million tons of corn in the 2016/2017 season.

Grain marketing

With the sale of soybeans, the producers open space in the warehouses to receive corn production. According to the estimation of consultancy INTL FCStone, 74% of soybean production 2016/2017 was sold until the end of July. In the case of corn, producers have already sold 73% of the first crop and have traded 46% of the second crop 2016/2017. “Sales are slowing this year. The percentage is lower, but it is worth remembering that the volume sold is much larger. We can expect significant soybean exports and increased corn exports,” said Ana Luiza Lodi, market analyst at INTL FCStone in an interview with Successful Farming Brazil.

Soybean Exports

Until the beginning of August, more than 53 million tons of soybeans were exported. “Exports have been advanced and remain warm. As we still have soybeans available in the market, we should export another 10 million tons and reach Conab’s export estimate, which is 63 million tons,” Lodi said.
Lodi told Successful Farming Brazil that the producer tends to prioritize soybean sales and store corn to sell ahead. “The price of soybeans is more advantageous compared with corn. There is still too much soybean stored, and the producer doesn’t have enough warehouses for corn. We heard a lot of cases of producers buying silo bags and corn in the ground.”

Corn Exports

Although corn exports are concentrated in the second half of the year, shipments are also high. In July, there was a record export of 2.3 million tonnes of corn. “The exchange rate is not so favorable. Freight has increased, and the producer isn’t satisfied with domestic prices, but we have enough corn to export,” says Lodi. Conab estimates exports of 28 million tonnes of corn and high stocks of 21.6 million tonnes.
Expensive freight hinders the Brazilian market
The minimum price of corn in Mato Grosso is $5.25 (R$ 16.50) per 60-kilo bag, but corn is being sold for about $3.81 (R$ 12) per 60-kilo bag. “Price is the biggest concern at the moment,” says the analyst.
The problem is exacerbated by the cost of freight, which is more expensive. According to a study by INTL FCStone, freight for the route between Sorriso (an important producer pole in Mato Grosso) and the port of Paranaguá cost $ 73,12 (R$ 230) per tonne at the end of June. The freight price reached $ 87,43 (R$ 275) per ton on August 11.
Freight was impacted by the increase in Brazilian taxes PIS/Confins, which generated an increase in the price of diesel oil by about R $ 0.20 per liter. “This tends to make exports more expensive and undermines Brazil’s competitiveness,” says the analyst.
* Conversion from real to dollar at an exchange rate of R$ 3,14 per dollar.

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