Porto Alegre, February 28, 2023 – The difficulties for the soybean harvest in 2023 continue. The situation has greatly improved in the Midwest, and corn planting is progressing and may end in the first ten days of March. However, the other regions continue with a complicated situation and a late second season. It is still difficult to say that there will be a decline in the planted area due to this delay, but we can say that around 50% of the area will be seeded in March. This is not a serious problem and only puts production at a higher risk curve with the fall/winter weather. Meanwhile, internal consumers managed to hold corn prices for another month while growers hold soybeans in warehouses and sell corn.
As for the facts that occurred with the fattened cattle, with one more case of atypical BSE in an animal over 10 years old in Pará, and the increase in cases of avian flu in Argentina, we must reflect that these events do not change the internal demand of corn and let alone change the internal supply profile. First, because now is a moment for pasture cattle and lower confinement volume, and second, because the stoppage of exports to China must only occur for 30 days. The cases of avian flu did not reach commercial farms in Argentina, let alone in Brazil. However, preventive procedures must be emphasized from now on. So, the corn scenario in Brazil has nothing to do with these health cases.
Soybean yields are well above the normal average and the growers’ expectations, except for Rio Grande do Sul and some points in western Paraná. However, it is a delayed and concentrated harvest, already bringing clear effects on Brazilian logistics. Growers keep looking for space to store more soybeans while selling corn. This condition helps corn consumers to be supplied in the short term and, under the selling pressure by growers, to contain prices in the short term. That was the month of February. The news on soybean production losses in Argentina makes growers retain even more soybeans than corn.
However, the soybean harvest delay is further slowing down the corn harvests. If the harvest has been initially forecast for late June/July, now they will be more concentrated at the end of July/August. And this must prolong the 2023 off-season a little longer and demand more physical corn. Consumers seem not to worry about this picture and even make room for sellers to start making volumes for exports through the ports of Rio Grande and Imbituba.
Regional corn harvests are also progressing slowly, except for Santa Catarina and Rio Grande do Sul. The moment is for concentration on the soybean harvest. In February, growers sold corn and then retained it. This helped consumers to stock up, even for the short term, and contain any more aggressive price movements. The relatively stable prices in February indicate that there was supply, either because of consumers’ stocks or because of the growers’ selling pressure, to supply the internal market without serious situations. The issue is that we will need corn at least until mid-July and with product still from the summer to supply the domestic market. The attempt to “stretch” supply until the arrival of the corn second crop is becoming an increasingly delicate alternative for domestic demand.
At the end of April and May, the summer crop of Minas Gerais and Goiás must appear in regional harvests. Would this volume be enough to serve the entire market in the Center-South? Meanwhile, the Brazilian market continues to ship almost 2.6 mln tons in February and March, a volume that could reassure domestic supply. If, on the one hand, the excessive rains are delaying the planting of the second crop, on the other, they are guaranteeing a good start for the already planted crops. Therefore, for the time being, there is security about supply in the second half, and there is the challenge to reach July without a price crisis in the domestic market, especially since Argentina and Paraguay are short-term alternatives.
Follow the Safras Agency on our website. Also follow us on our Instagram and Twitter and stay on top of the main agribusiness news!
Copyright 2023 – Grupo CMA