Commodities Shuttle: Corn production will be higher and exports increase, but stocks decline

Off-season corn production is expected to be better than expected last month. A new estimate by Conab (National Supply Company) now predicts 89.3 million tons.

If confirmed, this volume exceeds by 47% that of the same period in 2021, when drought and frost caused a drop of 20 million tons, in relation to the productive potential expected for that period.

With the improvement in the off-season, the country should obtain a total production of 116.2 million tons of cereal during the 2021/22 harvest. Brazil produces three corn crops throughout the year.

Sergio De Zen, director of Conab, warns, however, that this volume of production is not consolidated and “there is a possible downward bias”.

The southern region will still experience low temperatures, which, in the case of frost, will affect productivity. Mato Grosso, the largest national producer, may also have production problems, but nothing of great proportions, according to him.

An increase in production improves domestic supply, but Conab also predicts an acceleration of national exports of the cereal. In March, estimates were for foreign sales of 35 million tons. Now, expectations are 38 million.

Greater blending of corn ethanol in gasoline in the United States, delayed planting in the US crop, rising oil and Ukrainian difficulties in exporting keep the cereal at a high level in the international market. All this favors Brazilian exports.

In the past harvest, the absence of 20 million tons of the Brazilian cereal in the international market affected prices. The initial forecast was for exports of 44 million tons, but the country only placed 20.8 million on the international market, according to Secex data.

In this 2021/22 harvest, when exporting 38 million tons, the country should replace an extra volume close to what Ukraine stops exporting, due to the conflict with Russia.

A higher export volume, however, reduces internal ending inventories. Conab revised its estimates and forecasts a drop in this volume to 10.4 million tons, 4% below previous estimates.

With regard to wheat, despite the good prices, the people of Paraná did not believe much in planting the cereal. As forecast by Conab, the wheat area will be reduced by 3.3% in the state this year, but it will grow by 9.7% in Rio Grande do Sul.

The country’s total production, which totaled 7.7 million tons in 2021, rises to 8.1 million this year.
Conab also readjusted upwards soy production, now estimated at 123.8 million tons, a volume, however, still well below the 144 million tons initially forecast.

Total national grain production in the 2021/22 harvest is expected to be 272 million tons, according to Conab’s latest expectations. Forecasts at the end of last year pointed to 291 million tons.