- Brazil’s second corn crop harvest is slower than usual.
- Moist weather is holding back harvest conditions.
- Frosts had little impact on crop stages already passed.
- Exports are currently slow but stable for July.
- Domestic demand remains healthy but requires export support.
Slow Harvest Performance Amid Wetter Conditions
Despite a challenging weather climate, Brazil’s second corn crop is witnessing a harvest that, though slower than typical for this time of year, remains on track to accumulate eventually. Currently, moist conditions paired with rainfall during the transition to winter are impeding the harvesting process. As for last week’s frosts, they had a minimal impact on the overall corn production, especially since the crops had already passed the crucial growth stages; however, some regional crops could have taken a hit from late frosts and subsequent rainfall, raising concerns about quality, especially for exports, which are lagging.
Harvest Developments Across Key Regions
Areas like Mato Grosso and Matopiba are ramping up their harvest efforts while initial yields are satisfying contracts as well as meeting local demand. Harvesting in Goiás is anticipated to gain momentum starting this week after last week’s rains. Meanwhile, Minas Gerais and São Paulo are beginning to conduct sorghum harvests, though the real corn harvest is set to kick off around mid-July. Unfortunately, the regions of Paraná, Paraguay, and Mato Grosso do Sul have faced persistent rains throughout June, which are prolonging the harvest; some corn hybrids might even see decreased quality if moisture continues.
Exports and Domestic Demand Need Balance
With an estimated 100 million tons expected to hit the market in the next few weeks along with an additional 10 to 12 million in Matopiba, there is a pressing need for a strong export flow to prevent potential price issues on the domestic front. Currently, domestic demand is looking encouraging, but the market cannot absorb such a high volume without additional export mechanisms in place. Considering the weak shipment figures from June, which accounted for merely 650 thousand tons, one can see the necessity for significant improvements in port operations, especially at key locations like São Luís, Santos, and Paranaguá, to facilitate greater corn shipment.
Pricing Challenges and Ethanol’s Limited Impact
What complicates the scenario further is the formation of prices within ports; with last week’s CBOT prices dropping to USD 4.00 per bushel, and the dollar hovering around BRL 5.50, a chilling effect is seen in local market prices. Ports currently see prices ranging from BRL 63 to 66 per bag for shipments slated for the latter half of the year, but liquidity in July is palpably low. Moreover, the anticipated increase of ethanol content in gasoline may not significantly affect this year’s corn consumption, as industrial capacities are already maxed out and would require new investments to increase usage rates for corn in ethanol production.
In summary, Brazil’s second corn harvest is progressing, albeit slowly due to rain, with concerns about quality arising from frost damage and moisture. Export flows appear critical to avoid domestic price pressures with tons of corn set to enter the market. The future of corn consumption hinges on needed investments to enhance industry capacities and adapt to changing market dynamics in the coming years.
