Porto Alegre, October 29th, 2024 – Buying actions by domestic consumers, still important export flows, retention by growers, and a bullish sentiment help the domestic corn market to find room for new highs. Last week, prices in Mato Grosso jumped to BRL 55, in some locations they were even higher, with Paraná at BRL 66/67/68 and São Paulo at BRL 70/71 in the interior. A quick and somewhat premature high for Brazilian corn, which does not indicate a shortage, but rather a grower’s parsimony in trading. That also reflects the still favorable export demand for the business year profile, as well as a seemingly unconcerned attitude of consumers regarding stocks in the post-harvest of the second crop. Fortunately, even with a heavy reduction in area during the summer, the Brazilian crop continues to develop well, not posing a risk of losses for the small production in the first half of 2025.
The domestic market has positioned itself with a more aggressive buying movement by exporters since the end of the second-crop harvest in August. Along with this movement, the exchange rate began to operate at lower levels, contributing to boosting prices at ports. Some distorted assessments, however, may have led the Brazilian consumer sector to erroneously assess the corn situation. The first and main one is that Mato Grosso would have a second-crop crop far above 50 mln tons, overflowing corn for all demands. The second, which is still present in some erroneous market assessments, is that exports were or are at a very slow pace, and this would bring more stocks to the domestic market, with excess supply. In fact, there is no shortage of corn for anyone, however, exports are firmly on track to reach 40 mln tons, if the domestic market allows it. In this case, the context of the trading companies’ commitments to the logistics contracts for this second half of the year was not correctly assessed. Soybeans were completed early, and there is no other commodity in volume to complete logistics until January. Therefore, corn continues to be mainly a product of the second half of the year, even with operations that seem expensive and with negative results.
The feeling that higher domestic prices are making exports unfeasible is just a primary assessment, without any realistic professional context of everyday life. Every week we see higher prices at ports, also helped by the exchange rate, but with traders accepting higher levels to meet logistic commitments, and this has spread to the interior of states such as Goiás, Mato Grosso, Matopiba and Paraná.
Thus, we reach 28.7 mln tons accumulated between February and the preliminary data for November. Next month, 2.1 mln tons are scheduled so far and could easily reach 4 mln. Therefore, we only have 11 mln tons between November and January to close the 24/25 business year with a volume of nearly 39/40 mln tons. This means that if there is any improvement in supply, due to the grower’s cash needs and/or due to the release of space for the 2025 crop, exporters will still be on the market because there is room in the logistics as well as in the international demand environment.
A parallel factor is that some ethanol industries have also accelerated purchases in recent weeks and are absorbing large-volume lots, focusing on supply for the first half of 2025. This combination of purchasing action between exporters and ethanol industries was intense, and prices closed at BRL 55 to BRL 60 in Mato Grosso last week. It is clear that this state’s math is starting to limit the
export of corn to other states. Therefore, domestic demand from the animal sector needs to increase in purchases from other regions. Goiás jumped to BRL 60/62 last week, Paraná to BRL 66/68, São Paulo to BRL 70/72, Minas Gerais to BRL 62/65, and Mato Grosso do Sul to BRL 60/64. In Matopiba, the strongest demand is for exports, however, consumers have not been able to do large deals in the Sergipe region, and this is bringing back demand for corn from Bahia and Piauí to BRL 58/60.
In the South of the country, the market is trying to bet on a strong arrival of wheat from now on in Rio Grande do Sul. The attempt is to absorb lots in line with exports, BRL 60 CIF industry for feedstuff. Corn is currently having difficulty getting good lots below BRL 70, and growers are not selling the new crop for January and February. In Paraná, the OTC price went to BRL 60, and the market will assess whether this is a sufficient price for growers to increase their appraisal from now on.
While this market movement is taking place, the Brazilian summer crop is being planted and is in excellent condition. In the South region, crops are within their normal cycle and should begin to pollinate and silk in November and with excellent development. The only point of attention in this crop is the reduction in the area planted with grain corn and the increase in the share of silage in the total production. This may give the false visual impression of a supply of grain corn while a large part of crops will be destined for silage.
The Southeast, Midwest, and part of Matopiba regions are now in good condition with strong progress in soybean planting and summer corn development. Only Maranhão and Piauí still have delayed rains. The 2025 second crop has no impact on corn. What we will see is a planting period returning to the traditional window from January 20 to March 30 in most growing regions. This implies a little more climate risk due to pollination in May in the Midwest and pod-filling in June in Paraná. A semester that could be tense for domestic supply and technically high prices. Importing corn from Argentina is always a possibility for the first semester, but it does not meet everyone’s needs and currently represents BRL 85 CIF factory in the South and Northeast of the country under a drawback regime. Therefore, we are far from finding the alternative of importing as viable in the medium term.
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