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April 22, 2021

Brazil Could Open Door to Corn from the U.S. and/or Ukraine

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian government announced earlier this week the suspension of import tariffs for grain imported from outside the Mercosul Trading block. The suspension will be in place until December 31, 2021 and will include corn, soybeans, soybean meal, and soybean oil. In theory, this could open the door for corn imports from the United States and/or Ukraine.

The Brazilian Corn Producers Association (Abramilho) defends the decision of the government and they emphasized the importance of free markets for both corn exports and corn imports. Livestock producers in southern Brazil are already importing corn from Argentina and Paraguay in order to keep their operations up and running.

Demand for Brazilian corn has increased significantly in recent years both domestically and internationally. Corn exports from Brazil have been very strong due to the international market and a devalued Brazilian currency. Domestic demand has also been very strong due to the growing livestock sector and increasing amounts of corn used to produce ethanol. Currently, approximately 9% of Brazil's ethanol is produced from corn, which is up from 0% five years ago.

Adding to the tight domestic corn supplies are concerns about the safrinha corn crop, which accounts for approximately three quarters of Brazil's total corn production. The safrinha corn was planted very late due to the delayed soybean harvest and now the crop is facing a serious threat from an early onset of the annual dry season across south-central Brazil.

The areas of biggest concerns for the safrinha corn are the states of Parana, Mato Grosso do Sul, Sao Paulo, Goias, and Minas Gerais. These five states account for approximately half of Brazil's safrinha corn production.

The Brazilian Association of Animal Protein (ABPA) is asking the Brazilian government for emergency authorization to import GMO corn from the United States that may not be approved for planting in Brazil. They want the authorization to apply for corn that will only be used for animal rations. Such an exemption has been issued in the past when corn supplies were similarly tight.