BRAZIL CORN WATCH: Export sluggish on tight supply amid rising spot prices

Corn exports from Brazil have remained slow so far in July as harvesting delays and a smaller crop yield in 2020-21 turned suppliers cautious about making new sales.

Brazil corn exports during the first 12 business days of July stood at 523,906 mt, at a daily rate of 43,659 mt, against a daily rate of 173,010 mt in the whole of July 2020, customs department data showed.

Producers continue to limit the supply of corn in the spot market and prioritize deliveries of lots negotiated in advance, the Brazil-based Center for Advanced Studies on Applied Economics (CEPEA) said in a note.

Mato Grosso, which accounted for 64% of Brazil's total corn exports in 2020, is expected to export 17.18 million mt during 2020-21 (July-June), down 23.3% year on year, the Mato Grosso Institute of Agricultural Economics (IMEA) said in its latest report.

Brazil's corn export forecast for 2020-21 stands at 29.5 million mt, according to national agricultural agency CONAB. Brazil exported nearly 35 million mt of corn in 2019-20, according to customs data.

However, many analysts have put the country's corn export forecast lower than CONAB's, with a production cut expected in the August crop survey due to frost damage.

The extent of the deficit in corn supply in southern Brazil can also limit corn exports.

Although Brazil is usually the second-largest corn exporter in the world, southern states in Brazil often import from Paraguay and Argentina as it is cheaper than transporting corn from the Midwest region of Brazil where the bulk of the corn crop is grown.

The animal protein industry, a major consumer of corn feed, is concentrated in southern Brazil.

Corn crops in neighboring Paraguay have also been hit by dry weather and frost, which could affect corn exports to Brazil.

Southern states may have to increase purchases from the Midwest region if corn supply declines in Paraguay.

Corn prices gathered momentum in the local spot and futures market during July 12-19 as fears of further crop damage emerged after frosts over the weekend.

In its weekly report, CONAB described a period of intense price increases in the domestic market over July 12-16. "The increase [in prices] in consumer regions is justified by the lower availability of the grain after the weather impacts on productivity in the first and second harvests," it said.

Harvesting of Brazil's second corn crop is currently in progress.

The second corn crop harvest across nine states, accounting for nearly 92% of the area, was 30.0% complete as of July 17, from 43.6% around the same time last year, CONAB said in its latest weekly report.

Second corn harvesting in the major producing states of Brazil

Brazil's corn production in 2020-21 is down significantly due to drought throughout most of growing months. Moreover, the formation of frost towards the end of June in the southern states of Brazil worsened yield losses.

Brazil's 2020-21 corn production forecast was cut to 93.38 million mt from 96.39 million mt projected in June, CONAB said in its monthly survey on July 8.

However, local reports from commodity consultancies peg production closer to 90 million mt.

Agroconsult has forecast total Brazilian corn production at 90.2 million mt in 2020-21, while AgRural sees output at 85.3 million mt.

Brazil produced a record 102.515 million mt of corn in 2019-20 (February 2020-January 2021).