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BRAZIL CORN WATCH: Exports for 2020-21 likely to fall sharply on latest output cut

Highlights

Rabobank estimates 2020-21 Brazil corn exports at 21 mil mt, down 12 mil mt

Brazil's 2nd corn crop harvest at 20.9% compared to 36.1% same time last year

Brazil's corn exports are likely to fall sharply in the 2020-21 marketing year, which begins March 2021 and ends in February 2022, due to further cut in production estimates.

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Brazil, the second-largest corn exporter in the world, suffered significant yield losses this season due to severe drought during most of the growing phase and was further affected by frost that hit corn crops in the southern part of the country towards the end of June.

Brazil's 2020-21 corn production forecast was cut to 93.38 million mt from 96.39 million mt projected in June, the country's national agricultural agency CONAB said in its monthly survey on July 8. Brazil produced a record 102.515 million mt of corn in 2019-20 (February 2020-January 2021).

However, local reports from commodity consultancies peg Brazil's corn production closer to 90 million mt.

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

The second corn crop conditions worsened overall in the state of Parana, the second-largest producer of corn in Brazil, Parana's state agriculture and livestock department said in an update.

"Overall, of the 2.46 million hectares to be harvested 88% are in poor or average condition. In this scenario, we should have a significant reduction in expected production," Parana's state agriculture department said in the report.

The decrease in Brazil's production estimates will likely limit corn exports in the second half of 2021, as domestic prices will probably have to rise above export levels in order to assure supply for domestic consumption, Rabobank said in a report.

"During the last two seasons, Brazil exports surpassed 30 million mt per season. However, for the current season, Rabobank is estimated that exports will be 21 million mt -- 12 million mt below last year's levels," the report said.

Meanwhile, CONAB's latest corn export forecast for 2020-21 stands at 29.5 million mt, while the US Department of Agriculture's projection is at 28 million mt.

Brazil has exported nearly 1.3 million mt during February-June as compared to 1.15 million mt for the same period last year, but significantly below the five-year average level of 3.56 million mt for the first five months of the marketing year.

Moreover, Brazil corn exports remained sluggish during the first seven business days of July at 153,866 mt at a daily rate of 21,981 mt, while it was at 173,010 mt/day in the whole July 2020, customs department data showed.

Currently, harvest of second corn crop is under progress in Brazil.

Brazil's second corn crop harvest in the nine states, which accounts for nearly 92% of the area, was at 20.9% as of July 10, as against 36.1% around the same time last year, CONAB said in its latest weekly report.

Second corn harvesting in the major producing states of Brazil

States

July 11

2020 in %

July 3

2021 in %

July 10

2021 in %

Goias

16.0

5.0

9.0

Piaui

23.0

15.0

25.0

Tocantins

45.0

13.0

16.0

Sao Paulo

20.0

3.0

8.0

Minas Gerais

45.0

23.0

28.0

Maranhao

35.0

20.0

30.0

Mato Grosso do Sul

10.0

1.8

3.0

Mato Grosso

63.3

28.0

38.6

Parana

8.0

2.0

3.0

Total

36.1

14.9

20.9

Although corn harvest is gathering pace in the country, prices remained high due to recent cut in production estimates.

Corn price received by producers in Brazil in real/60 kg

June 2nd Week(2020)

June 28-July 2

July 5-9

Year-on-year % change

Lucas do Rio Verde/Mato Grosso

33.24

63.25

57.50

72.98%

Londrina/Parana

42.20

75.50

82.40

95.26%

Passo Fundo/Rio Grande do Sul

41.50

77.00

82.83

99.59%

Uberlandia/Minas Gerais

42.00

85.00

89.30

112.62%

Source: CONAB

CEPEA corn indicator

50.16

89.34

95.07

89.55%