Porto Alegre, August 27th, 2024 – The Brazilian domestic market does not find room in the international environment to support prices at ports and generate a higher flow of exports. We can say that port flows are normal for the characteristics of the year, with a large part of shipments carried out by the North Arch and Santos. Therefore, the domestic market is subject to exchange rate variations and the consequent movements of trading companies in domestic origination. At the same time, we will have this seasonality of the end of the second-crop harvest in most states and its effect on domestic supply. The grower seeks to retain, focusing on a price recovery, which is completely normal. Therefore, the market moves forward with business when there is this exchange rate volatility, an improvement in prices, and a better selling interest by growers. Fundamentally, however, we continue with the 2024 profile, that is, the need for exports of 40 mln tons to reduce domestic surpluses, and the planting conditions for the 24/25 summer crop planting.
Domestic sales were a little more agitated last week. Growers are still not making significant progress in establishing a strong presence in cooperatives and cereal growers, and are still selling at a steady pace in states where sales are direct and waiting for a variable that will impose a better domestic price level. So, on the one hand, there is retention. When this retention is associated with some support factor, even if it is temporary, the business flow increases.
This was the case this week, with a new important movement by trading companies making large volumes of regional purchases, focusing on September shipments in particular. With the exchange rate seeking levels close to BRL 5.50/dollar, prices at ports returned to testing BRL 65/66 for September/October shipments. This reference point returned to generating business flow at BRL 43/45 in Mato Grosso, BRL 50/52 in Goiás, BRL 47/52 in Matopiba, and BRL 53/54 in the interior of São Paulo. Some states are having difficulties with export flows, such as Paraná, Mato Grosso do Sul, and Minas Gerais. At this point, the domestic market is moving toward higher prices for fear that exports could empty stocks.
In Paraná, prices ranged from BRL 56 to BRL 60 depending on location during the week, Mato Grosso do Sul from BRL 50 to BRL 55, and Minas Gerais from BRL 53 to BRL 56. São Paulo continues to have strong retention, without offering much support for exports, but maintaining levels of BRL 52 to BRL 55 in the interior. This year’s detail was more evident in sorghum, with strong losses in Minas Gerais and Goiás and final yields well below last year. Sorghum gained strength in prices in Minas Gerais to BRL 45 to BRL 50 and in Goiás to BRL 40 to BRL 42. We are cutting the 2024 Brazilian sorghum crop, due to weather conditions, only maintaining the excellent crop in Bahia.
We are just closing the month of August, with the second-crop harvest coming to an end and, of course, there is still plenty of corn in warehouses and silos to meet domestic demand and exports. However, each week there are fewer soybeans in the hands of growers, and the financial needs of growers from now on will need to be met with corn until the summer crop begins. At this point, this is a week of debt maturity, in which we may see signs of greater fixation and sales, as well as at the end of September. After that, the concern is with the turn of the year, since a large soybean crop is once again expected, with needs in logistics. This space in logistics will need to be vacated for the arrival of soybeans. The risk for corn is a pressure to sell at the end of the year to empty warehouses.
Meanwhile, the focus remains on export flows. Brazil now has 17 mln tons committed to exports, with August seeing a good shipment of close to 7 mln tons, with 4 mln already shipped. September is moving up in terms of nominations, with 2.7 mln tons, and tends to follow the pace of August. Then, attention turns to the volumes from October to January, already competing with US crop, but Brazilian corn is currently USD 20/ton more expensive than the international market.
The point that is beginning to emerge for domestic expectations is the planting and development of the summer crop. It has rained in the South region, and earlier corn planting should move forward. However, September tends to be a month with little rain in most producing regions, perhaps also delaying the soybean planting. As of this end of August, we will begin monitoring the planting of the 24/25 crop.
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