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November 25, 2019

Brazil Could Import a Small Amount of Corn Due to Tight Supplies

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

There is speculation in Brazil that the corn carryover situation in Brazil could get so tight that domestic corn prices could skyrocket to such an extent that it might be viable to import a little corn into Brazil.

There are two things happening in Brazil, Brazil is exporting corn at a torrid pace and there is strong domestic demand for corn from the livestock sector. Brazil continues to increase its meat exports to such an extent that cattle prices in Brazil last week hit an all-time record high. Additionally, new corn-only ethanol facilities are consuming an ever increasing amount of corn especially in Mato Grosso.

If Brazil's corn exports continue at this pace, the corn carryover will be extremely tight. The full-season corn will start to be harvested in January and nearly all that crop goes to the livestock industry in southern Brazil. The full-season corn will only account for approximately 27% of Brazil's total corn production. The safrinha corn will start to be harvested next June and that is the corn that goes into the export market. The safrinha corn crop will account for approximately 71% of Brazil's total corn production.

Analysts in Brazil are split on what they think will happen with the domestic corn market. One analysts contacted by the consulting firm T&F Consultoria Agroeconomica, which is located in Rio Grande do Sul in southern Brazil, estimates that corn prices in the state could hit R$ 50 per sack (approximately $5.50 per bushel), before new supplies are available. Another analysts contacted by the firm feels the corn prices will decline once the full-season corn harvest starts in about 45 days.

An additional factor in Brazil is the high cost of transporting grain from one part of the country to another. Sometimes it is cheaper to import grain into northeastern Brazil for example than it is to truck it in from distant parts of the country.