Brazil is about to reap a record corn crop. The pace of domestic consumption and exports in recent years, however, does not leave room for surplus. Internal and external demands will keep cereal prices adjusted.
The development of the national protein chain, the increase in corn ethanol production and the greater opening of the foreign market have absorbed an increasing volume of the product.
As a result, cereal prices and those of derivatives do not have much room for declines. The sack of corn, even with the harvest in progress, is being negotiated close to R$ 82 since the end of June, according to Cepea.
For this 2021/22 crop, Conab (Companhia Nacional de Abastecimento) estimates a record production of 115 million tons, but domestic consumption also rises to a record level of 77 million, 7% above the volume of the previous crop.
Exports, after the slump last year, due to drought and frosts, return to a volume close to that of 2020. Estimates range from 37.5 million to 40 million tons.
Meat production in Brazil, a sector that uses a lot of corn in the feed, grew in all segments in the second quarter of this year, in relation to the same previous period, according to the IBGE (Brazilian Institute of Geography and Statistics).
Although the internal demand, due to the low income of the consumers, does not favor the sale of meat in the domestic market, the external demand sustains the production.
In the months of April, May and June, Brazil increased its beef production by 2.3%; in 6% pork; and in 1% that of chicken. A good part of this production goes to the foreign market.
The corn market should also continue to grow because two of the main world exporters will reduce their presence in the foreign market, opening up even more space for the Brazilian product.
Ukraine, which shipped 30 million tonnes abroad in the 2018/19 harvest, is expected to export just 12.5 million tonnes in 2022/23.
Although low, this volume is higher than the 9.5 million previously estimated by the USDA (United States Department of Agriculture).
The Americans, with lower productivity in this year’s crop, due to the dry and hot weather, are also expected to export less. It will be 61.5 million tons, well below the 68.3 million in 2020/21.
The European Union, affected by drought, will place only 2.7 million tons on the foreign market this harvest. In the previous one, there were 5.8 million.
According to Usda’s calculations, which considers the commercial harvest from the beginning of October of one year to the end of September of the other, Brazil and Argentina will place 88 million tons of corn on the foreign market. The Brazilian volume would be 46.5 million.
The lower Chinese presence in the market should ease the pressures. After importing 23 million tonnes this season, the Chinese will buy 18 million in 2022/23. Even so, the power of interference in the market is great. Three harvests ago, they imported only 4 million tons a year.
The Americans have already made an assessment of the 2022/23 corn crop in Brazil and forecast 126 million tons. For Argentina, they expect 55 million.
Ukraine, which before the war produced 42 million of the grain, will only harvest 30 million. The United States, leaders in world production and exports, has dropped production to 365 million.
According to the USDA, world corn production drops to 1.18 billion tons. Lower harvest and ending stocks with a 2% decrease in the period will make the world have enough corn for 94 days at the end of 2022/23. Any climatic problem in one of the big producers will bring serious problems to the world supply.
With the increase in the Brazilian harvest, the VBP (Gross Value of Production) of corn exceeds that of cattle this year, informed the Ministry of Agriculture, this Monday (15).
The cash flow with the cereal inside the gate rises to R$ 158 billion, 17% more than in 2021. Revenues from sales of cattle on farms, on the other hand, are R$ 152 billion, an 11% decrease over 2021.
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