BRAZIL CORN MARKET WATCH: Prices touch fresh high on thin supply

New Delhi — The weekly average corn prices in Brazil continued to climb to fresh highs in many regions during March 15-21 and may remain at higher levels until the second corn crop harvest begins in the second half of the year.

"As the planting of the second crop gets closer to the finish line with a tighter planting window, buyers and sellers negotiate prices for the upcoming crop

at historically high levels," national agricultural agency Companhia Nacional de Abastecimento (Conab) said in its weekly report on March 22.

Almost a quarter of the second corn crop area in Brazil was sown outside the ideal planting window this year, exposing the crops to possible weather risks.

Second corn planting in the nine states, which account for nearly 92% of the cultivated area, was complete in 83.6% of the total forecast area as of March 19 as

against 93.5% at around the same period last year, Conab said in its weekly crop progress report.

Despite the advance in the harvest of the first corn crop, buyers report difficulties in finding sellers as producers are expecting even higher values due to

low availability of the cereal on the spot market and uncertainties regarding the supply of second-crop corn, Brazil-based Centro de Estudos Avançados em Economia Aplicada (CEPEA) said in a note on March 22.

Moreover, low inventories and fall in first corn output in Brazil are also contributing to the upward movement of corn prices.

In Mato Grosso, the largest grain producer, weekly corn price indicator rose to Real 70.16/60 kg in the week ended March 19, up 1.5% week on week and

77.4% year on year as demand was high and availability of corn was low in the state, the Instituto Mato-Grossense de Economia Agropecuria (IMEA) said

in its weekly report.

In Parana, the second-largest producer, corn prices recorded new highs with producers receiving over Real 76/60 kg during March 11-19, 80% higher than the same period a year ago, according to the state Secretariat of Agriculture and Supply.

After starting on a strong note, corn exports from Brazil have also slowed in March as supplies dwindle.

Brazilian corn exports in the first 15 business days of March totaled 292,954 mt at a daily average of 19,530 mt, compared with 21,485 mt in the whole of March 2020, data released by the Ministry of Development, Industry and Foreign Trade showed.

Brazil is expected to export 35 million mt of corn in 2020-21 (February 2021-January 2022), slightly higher than last season, according to the Conab forecast.

Market outlook

The corn market participants will keep a close watch on the weather and development of crops in the coming days, which will be the main indicator of future price movements.

During March 22-29, rains are expected to be irregular in the Midwest region of Brazil with the largest accumulations of rain seen in the north and west of Mato Grosso, Brazil's National Institute of Meteorology (INMET) said.

There is no forecast for rain for the center and north Minas Gerais this week, but southern Minas Gerais may receive rain.

In Southern Brazil, Santa Catarina and eastern Parana may receive heavy rainfall, the forecast said.