BRAZIL CORN WATCH: Prices ease slightly on harvest pressure

Brazil corn prices eased during Aug. 23-27, with progress of harvest slightly improving the supply situation, analysts said this week.

Corn prices are falling in most regions as buyers pull back, hoping for a further decline in prices, Brazil-based Center for Advanced Studies on Applied Economics, known as CEPEA, said.

"On the seller side, with the harvest advancing and the increase in offers for cereal in the Brazilian spot, some are more flexible with prices, taking advantage by negotiating at current levels and also making cash to pay off current debts," CEPEA said in the note.

As of Aug. 28, 86.9% of the planted corn crop in Brazil was harvested as against 85.9% around the same period last year, data released by CONAB showed.

The harvesting operations are complete in Mato Grosso, practically finished in Sao Paulo and in the final stretch in Goias, Brazil-based Agriculture consultancy AgRural said in a note.

Moreover, drop in the international corn prices have negatively impacted local prices, Brazil's national agricultural agency CONAB said in its weekly report.

Corn price received by producers in Brazil (Real/60 kg)

Despite the fall in corn prices in Brazil in the week ended Aug. 27, corn prices are still sharply higher year-on-year due to significant drop in output in 2020-21.

Corn exports from Brazil, the second-largest exporter, have also fallen due to low supply and high price.

Brazil's corn exports during February-July reached 3.3 million mt, down 36% lower than the same period last year, the country's customs department data showed.

Although Brazil is a major corn exporter in the world, the southern states 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.

Parana, one of the largest producers of corn in southern Brazil, may have to seek out around 5 million mt of corn this season, the state's Department of Agriculture and Supply, or DERAL, said in a recent report.

Brazil already imported nearly 1.1 million mt during January-July, compared with 1.37 million mt in the whole of 2020.

Corn planting

The first corn planting for the season 2021-22 season has begun in southern parts of the country.

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

Second corn crop accounts for the bulk of Brazil's total output.

CONAB in its preliminary outlook has pegged Brazil's 2021-22 corn output at 115.96 million mt, up from 86.65 million mt estimated for 2020-21.

Brazil supply and demand estimates