Brazil’s sluggish corn planting could additional squeeze tight world shares -Braun

(The opinions expressed listed below are these of the writer, a market analyst for Reuters)

NAPERVILLE, Illinois, Jan 29 (Reuters) – With world corn provides set for decade lows later this 12 months, Brazil’s corn harvest can’t afford a mishap.

Brazilian corn shares are notably tight heading into 2024-25, and planting of the second corn crop, which accounts for nearly 80% of the nation’s corn manufacturing, is off to a sluggish begin.

Brazil’s second corn output is predicted to rise modestly this 12 months versus final, although if that fails, it may spell alternative for the USA.

Second corn in high rising state Mato Grosso was simply 1% planted as of final Friday, the date’s slowest tempo since 2011 however practically an identical to 2021. Each of these years plus 2016, one other sluggish 12 months, coincided with a few of the state’s poorest corn yields.

Premature rains have delayed Mato Grosso’s soybean harvest, which additionally delays corn planting. This shifts the corn yield formation window to probably overlap with the onset of dry season.

Farmers in Mato Grosso, on common, plant about 11% of their corn crop this week, so planting efforts ought to be no less than 12% full by Friday to keep up a considerably comfy tempo. The final week has been favorably drier, although rains may resume over the following a number of days.

Brazil’s No. 2 corn grower Parana has planted 9% of its second corn as of this week, a comparatively regular tempo. Late corn planting within the southern state presents frost harm dangers late within the season, which had been outstanding 4 years in the past.

Brazil has simply as a lot to lose when issues go flawed in Parana versus Mato Grosso, since yields are likely to fluctuate extra in Parana. That state’s 2020-21 second corn yield fell 50% beneath the long-term development, whereas Mato Grosso’s 2015-16 outcome was about one-third beneath.

The 2 states account for two-thirds of Brazil’s second corn harvest.

Southern neighbor and fellow exporter Argentina is battling dryness this season resulting from La Nina, the cool part of the equatorial Pacific Ocean. Brazil’s second corn yields don’t correlate as properly with La Nina or El Nino as do Argentina’s crops, however Brazil’s greatest outcomes usually don’t coincide with stronger La Ninas.

La Nina impacts Brazil’s southernmost state of Rio Grande do Sul in an analogous approach because it does for Argentina, however the state doesn’t increase second corn.

In mid-2024, Brazil harvested its second-largest second corn crop, some 12% smaller than within the prior report 12 months. Nevertheless, Brazilian corn exports since July are down round 29% on the 12 months.

Shipments to China, which was the vacation spot for 29% of Brazilian corn cargoes in calendar 12 months 2023, are down greater than 90% on the 12 months for the July–January interval.

The lighter shipments haven’t loosened Brazilian corn stock since home consumption has been robust. The U.S. Division of Agriculture pegs 2024-25 Brazilian corn stocks-to-use at 2.1%, a 42-year low and down from 7.1% within the prior 12 months.

USDA’s Brazilian counterpart Conab has a barely totally different take as 2.8% stocks-to-use in 2024-25 can be up from 2.1% within the prior 12 months however properly beneath the near-15% ranges of 2020-21.

For comparability, USDA predicts 2024-25 U.S. corn stocks-to-use at 10.2%. The bottom studying up to now this century was 7.4% in 2012-13.

This implies Brazil’s corn crop has little room for error, and any shortfall may end in a lack of world export share. This will assist lengthen the successful streak for U.S. corn exporters, who’ve loved above-average gross sales in current months.

Collectively, the USA and Brazil account for about 57% of world corn exports.

Each suppliers are lamenting the lack of Chinese language enterprise, which may theoretically resurface at any time. If China pops again into the Brazilian corn market, that would really feel like a loss for the USA.

However with skinny Brazilian shares, Chinese language purchases may not directly push different Brazilian clients to U.S. provides, particularly later this 12 months if the U.S. corn crop rebounds as anticipated. Karen Braun is a market analyst for Reuters. Views expressed above are her personal.