In February, Brazil recorded corn exports of 5.37 million tons. According to data from the Ministry of Development, Industry and Foreign Trade, this is almost five times higher than exports for February 2015, which stood at 1.10 million tons. These exports produced revenue of $892.2 million, compared with $206.4 million in February last year.
According to Lucilio Alves, a professor and grain researcher in Brazil, this phenomenon can be explained by a combination of a bumper harvest, favorable Brazilian exchange rate, and attractive prices. “We are seeing domestic corn prices 30% higher than those in Argentinian and American markets, and so producers are taking advantage of this opportunity,” he stated.
Although Brazil’s prices for corn have been high for some months, Alves explained that they do not represent an absolute record. “The price curve is rising and current corn prices are the highest we’ve seen in nominal terms. But taking inflation into account, the price is only higher than that of December 2012,” he explained.
Forecasts for 2016
February exports are up 20.6% on January volumes, which were 4.45 million tons. Cumulating volumes for 2016, Brazilian corn exports are at 9.83 million tons.
Corn exports are set to shrink in the coming months, giving way to soybean shipments. As soybeans are harvested, producers start planting the second crop, which includes corn, cotton, rice, and beans. An increase in the acres planted to corn for the second crop, plus a good harvest, is expected, boosting exports again during the second half of the year.
According to Flávio Antunes, consultant at INTL FCStone, Brazil may achieve record highs for corn exports. “The main factor driving exports is the exchange rate. Last year, the U.S. dollar was worth R$2.80 (Brazilian real). Now the dollar is worth R$4. For us, it’s beneficial to export, and it’s also good for buyers,” he says.
He believes the U.S. is forecasting an increase in the acres planted and a rise in production of corn, which may balance demand. “When the corn from the U.S. reaches the market, we may see a switch. Rather than seeking Brazilian corn, buyers may prefer American corn,” he said.
Nevertheless, according to Antunes, corn prices in the Brazil market will remain at a high level. “We have very low stocks, and the poultry and pig sectors need corn for animal feed. If we export less, there will be more corn for poultry and pigs. Demand will remain high for Brazil,” he adds. Brazil corn stocks, which stood at around 10 million tons last year, are set to shrink to 6.5 million tons this harvest.