BRAZIL CORN WATCH: Prices continue to ease, but dryness concerns remain

Corn prices in some spot markets in Brazil have continued to ease over the last few days, with buyers waiting for the second-corn crop to hit the market amid expectations of a bumper harvest.

The second-corn harvest usually gathers pace toward the end of June.

In Mato Grosso, the largest producer of second-corn crop, corn prices for the week ended on May 6 were down 1.3% week on week at Real 72.52/60 kg-bag ($235.81/mt), the Mato Grosso Institute of Agricultural Economics, known as the IMEA, said in its latest report.

Corn prices overall are likely to remain supported despite the recent weakness, the national agricultural agency Conab said in a report.

The expectation of weak real against dollar and rising interest rates in the developed countries amid the uncertainties of the Brazilian election should support the local corn prices, Conab said.

Moreover, demand is also seen increasing from the export sector and keeping corn prices firm in the second half of this year.

In Brazil, FOB Santos premiums for corn were reported unchanged for third-quarter loadings on May 10. Increasing demand for a second corn crop was observed, and a narrower offer-bid spread was indicated for August shipment, S&P Global Commodity Insights said in its latest assessment.

The market will be keenly watching the Conab's monthly crop survey report that will be published on May 12 for any signs of production cuts as some of the key corn producing states have been hit by dry weather.

The dry weather over the last few weeks has worsened the conditions of the corn crops in Goias, while the severe water deficit in Minas Gerais is affecting the crops which are in the crucial grain filling phase, Conab said.

The state of Mato Grosso has been suffering from the drought since April. Some areas in the state have not seen significant rains for more than 25 days.

Farmers in Mato Grosso are limiting their corn crop sales activity due to the uncertainties regarding the productivity of the cereal, the IMEA said.

"A few light showers will be possible across Parana Tuesday and Wednesday, but drier weather should prevail otherwise this week. The continued drier weather in central and northern areas will maintain stress on late growth, especially in Mato Grosso, Goias, Minas Gerais, Sao Paulo, and northern Mato Grosso do Sul," space technology provider Maxar said in its daily weather report on May 9.

The country is expected to harvest a record 115.6 million of corn in MY 2021-22, including the first-corn output, according to Conab's April survey.

Brazil's 2021-22 corn crop will be marketed from February 2022 to January 2023.

The first-corn crop in Brazil is planted in September-December and harvested in February-May, while the second crop is planted in February-March and harvested in June-July.

Brazil is usually the second-largest exporter of corn following the US.