Porto Alegre, October 24, 2023 – Brazil is finding space to take advantage of the artificial price momentum on the CBOT to boost exports. While the United States is unable to advance aggressively in sales, Brazil continues to seek new records. The difference in prices and the downward resistance in the CBOT, in the middle of the US harvest, favors Brazilian exports. Regional demand for exports is now consolidating some regional upward movement, initially in the Southeast but with odds of spreading to other states later. The point is that Santos continues to have very strong shipments, despite ship cancellations and greater difficulty in purchasing in the interior. China continues to be the major factor in increasing national sales.
Planting in Brazil started to advance better in the Southeast and Goiás for corn, but there was a slowdown in the pace of the South. This is due to another week of excess rain in Santa Catarina and Rio Grande do Sul, as well as southern Paraná, locations where there is a large volume of area planted with corn. Minas Gerais, with better rainfall in the south of the state, is progressing well but still has strong delays in the north. There is no concern, so far, that excess rain in the south will harm corn crops.
In Mato Grosso and Mato Grosso do Sul, soybean planting began to progress better last week, which offers a good horizon for planting the 2024 second crop. Even though some places in Mato Grosso register the need for replanting, we do not believe that the situation will fully affect the 2024 second crop window yet. Of course, El Nino could affect regions of the Center-North and compromise decisions about planting the second crop, however, this is a situation that can only be evaluated later.
The question that arises, as we have already indicated as a trend, is the effect of heavy rains on the wheat crops to be reaped. In the early harvests, the wheat PH was below 78. The trend toward a greater incidence of wheat for feedstuff until the end of the year. We are not yet able to assess whether this wheat will be of sufficient quality to also meet exports.
Meanwhile, corn imports by Brazil are quite discreet in comparison to the normal cycle. Paraguay, the biggest seller to Brazil, has some demand to meet shipments from Argentina and transports part of the crop via Asuncion. However, this is not enough to empty the Paraguayan market. There is a lot of retention and part of this corn frozen in the country may still end up in southern Brazil in the first quarter of 2024. To date, Brazil has imported only 650 thousand tons from Paraguay, practically one mln tons below the normal average.
For now, Brazil continues with record exports. Now, the line-up at Brazilian ports points to 9.4 mln tons in appointments in October, with 5.1 mln tons already shipped in the month. November now appears with nominations for 5.6 mln tons, slightly above the level to reach the projection of 55 mln tons for the year. We may have to raise the annual projection again. To date, Brazil has 44 mln tons committed to exports and has until January to complete the expected projection.
Despite the cancellations registered, there is still plenty of shipping at the port of Santos, mainly. This concentration is due to problems with the draft of rivers in the North Arc and ends up helping to support prices in the nearest regions, such as the interior of São Paulo and Minas Gerais. However, it does not help prices in Mato Grosso.
The question now is how long the United States will maintain high prices and refuse export demand. Besides, Brazil is beginning to receive a high flow of sugar exports, which contributes to the difficulties at the port of Santos. For Brazil to start reducing its shipment flow from now on, the United States needs to resume exports.
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