Brazil’s domestic corn price "skyrockets" to reignite safrinha crop debate
Prices in the domestic Brazilian corn market are said to be "skyrocketing" as farmers hold on to stocks in the expectation that prices will go higher, market sources told Agricensus.
The move is reigniting the debate around planting intentions for the country’s second crop as the higher corn price, unfurling disaster in Argentina’s corn crop, and the unwillingness of farmers to sell promotes expectations of greater acreage and higher production.
“Premiums are skyrocketing here,” one broker said of the situation, quoting the views of one of the major players in the Brazilian corn market who now expects the country to produce between 95 and 98 million mt.
“With the corn price, they said that farmers will plant as much corn as they can in order to produce more,” he explained. “Brazil will have more than 90 million mt.”
The fundamental picture fuelling domestic expectations encompasses recent Brazilian corn sales to Iran, potentially higher imports for Egypt, as well as perceptions that the South African corn crop may be in trouble, alongside Argentina’s drought conditions.
All of which is encouraging Brazil’s farmers to hold on to the old crop corn and capitalise on corn plantings for the second crop currently underway.
“Last Monday we raised our total corn production forecast from 89 million mt to 89.9 million mt,” Agrural’s Daniele Siqueira told Agricensus, with an increase in the planted area of the second corn crop key in that decision.
“Farmers are more optimistic because of the rising prices in the domestic market and are likely to extend the planting season into late March in some regions,” she continued.
According to the Brazilian agricultural research body CEPEA, corn prices for 60kg bags in the Campinas region, just north of Sao Paulo, have soared from BRL 31.89 on January 25, to now stand at BRL 41.02, an increase of over 22% in little over a month.
While it is seasonally not unusual for corn prices to rise at this period, with harvesting of the first corn crop underway and as farmers mull planting choices for the second crop, the prices seen are among the highest in over two years.
Corn crop caution urged
“We have seen some deals at very high prices, but they are isolated and don’t represent the market average,” Siqueira said, with some buyers having to chase higher as offers move up.
“The thing is that farmers still have a lot of corn, especially in the southern states, and [farmers] say they will sell it only when prices get even higher.”
Brazil’s largest agricultural state, Mato Grosso, published data on corn plantings in the state at the end of last week, and increased its production estimates to 25.91 million mt in total – up 1.97% on the back of conducive weather in the weeks ahead and an expected increase in area.
However, the data confirmed the second crop had lost out in some places to strong cotton plantings, which are set to deliver a new state production record, according to the IMEA.
"The low corn price, coupled with the preference for sowing second-crop cotton ... discouraged the allocation of areas to the cereal, thereby reducing area by 5.35% in relation to the previous crop,” the IMEA’s weekly corn bulletin noted.
Redressing that though has been strongly supportive weather forecasts, which look set to bolster yields in spite of the lower area, and that trend is playing out across the wider country, dividing opinion on how high estimates could go as the safrinha planting gets into its stride.
“We don’t see a significant rebound in planting intentions, we still forecast a 3.6% annual decrease in the planted area,” Siqueira said.
“For the moment, we don’t believe in production much above 90 million mt,” she said.