Porto Alegre, April 18, 2022 – The rains in the second crop regions of Brazil and Paraguay were favorable during the week. The vision of a full and early second crop keeps putting pressure on the market. In other words, this harvest starting in June will reduce the stress of the first semester on domestic supplies by at least two months. Growers still do not want to sell soybeans, keep selling corn even at lower prices, and the market must be supplied rather easily until the second crop begins. Trading companies are also waiting for an improvement in domestic prices to leverage exports, especially because growers are not yet offering large volumes at these current lower prices.
With international prices on the CBOT close to historic highs, but premiums for Brazilian corn falling aggressively over the week, port prices remained between BRL 89/91 for second-crop shipments. This level has been translated into prices of BRL 80/82 in Paraná, BRL 75 in Mato Grosso do Sul, BRL 67/71 in Mato Grosso, and BRL 74/78 in Goiás. Some traders are being closed in Mato Grosso and Goiás, but in the other states the business flow for the second crop has been very low.
The development of the second crop is now normal with last week’s rains. Great rain in Paraná, Mato Grosso do Sul, and Paraguay, regular rains in most of the other regions, and important rains for the region that had been coping with problems between the east of Goiás and the north of Minas Gerais. In Matopiba, the planting is practically finished and with a very favorable development so far.
This condition of the second crop begins to signal more clearly the possibility of record production and that must find space in warehouses and liquidity in trading. This is where the internal market persists under pressure. Cooperatives and traders try to pressure the sales of corn, and growers continue to sell old or summer corn so as not to keep their warehouses busy, not least because soybeans are still not sold and consumers are waiting for the sales pressure of the second crop to exercise a good purchase at prices in line with the port.
Brazil’s second crop still has 60 days to be defined, and the US crop, 120 days. Therefore, weather variables can still weigh on the composition of prices and expectations, especially the USDA May supply and demand report, which must support corn prices. Meanwhile, the Brazilian market needs to find space in exports. There is little external demand in May and June, but there is clearly good demand for July onward, as is normal for Brazilian exports. However, port prices and the prices asked by growers still do not match perfectly. Perhaps, with more than 30 days of good weather in Brazil and the planting within a good window in the United States, the sales flow of Brazil’s second crop begins to rise and shows a better size for the beginning of the harvest.
Agência SAFRAS Latam
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