Porto Alegre, September 20, 2022 – While the crops in the Northern Hemisphere and China are being defined, the crop of corn in South America will be the target of observation as of September. The presence of a low-intensity La Nina does not eliminate the risks for South American production in 2023, with volatilities in international prices becoming routine due to the regional climate. For now, the rain is coming in due time and making it possible to advance planting in several locations in southern Brazil and, now, in Mato Grosso do Sul, São Paulo, and Paraguay. Argentina still shows below-normal moisture, but the country has the planting ahead and possible better weather conditions. Brazilian exports reach 26 mln tons, and the shipments of the last four months of the year will define the Brazilian carryover stocks for 2023.
The Brazilian corn market continues to be fueled by the profile of port prices and demand from trading companies. So far, producers have managed to carry out a slow sales pace trying to escape the low prices of the harvest period, waiting for better prices, given all the current information in the Brazilian market this year. From possible good imports from China to a super crop failure in the United States, Brazilian producers have been bombarded with information that influences their corn-trading decision, as is already the case with the loss of sales opportunities with soybeans.
In fact, in the case of corn, some situations arouse attention and concern about the global supply environment and that could affect prices in the first half of 2023, not least because the United States, Europe, Ukraine, and China are harvesting their crops at the moment. However, Brazil still needs to work on its exports and go through critical sales periods, such as this September closing and the turn of the year, when warehouses will need to be prepared for the record soybean crop that is coming.
Exports are progressing well. Now, Brazil has 26 mln tons in the shipment schedule until October for a target, which must be reached, of 37 mln tons. October will be an important month to define this potential for a volume of roughly 40 mln tons, at least. There is external demand, there are balanced port prices, there is space in ports, and trading companies are operating aggressively. Therefore, shipments continue at a good pace. What does not exist is the presence of Chinese purchases in Brazil. Iran continues to be the main Brazilian buyer, followed by Spain, Egypt, and Japan, with the surprise of the accelerated presence of Colombia. Europe has already bought nearly 2.5 mln tons from Brazil, besides almost 3 mln tons from Argentina this year. Therefore, the “Europe” effect is already present in the South American market.
While exports have their rhythm and their effects on the domestic market, the planting of the 22/23 crop continues with good rains since August in the South region and is now advancing in the other regions. It is clear that La Nina remains a point of concern ahead, but for now, the picture is the arrival of rains, with Paraguay advancing in the planting of soybeans, as well as the west of Paraná and the south of Mato Grosso do Sul, a fact that offers a good outlook for the planting of the 2023 second crop.
In Argentina, corn and soybeans are planted later than in Brazil, so there is still time for weather conditions to improve and allow for the planting of the 2023 crop. The US crop is lower than expected, the South American crop gains significant attention from the international market, and any weather variable will be a point of strong volatility for prices on the Chicago Board of Trade.
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