With agents focused on crops development, liquidity is low in Brazil

Cepea, February 19, 2021 – The trading pace for corn was slow in Brazil in the first fortnight of February, with farmers focused on the development of the 2020/21 summer crop. Thus, many sellers were away from the spot market – only some agents were trying to trade the batches remaining from 2019/20. However, purchasers were not willing to pay the high price levels.


In the second week of the month, international devaluations and the dollar depreciation pressed down quotes at ports and in many of the other regions surveyed by Cepea. Still, the averages this month are more than two-fold that in February 2020.


Devaluations could have been worse if prices in Rio Grande do Sul were not firm – in this state, farmers are concerned about crops productivity, despite the better weather conditions.


Between January 29 and February 15, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) remained practically stable (+0.07%), to 83.40 BRL (15.51 USD) per 60-kilo bag on Feb. 12.


CROPS – Crops development and the harvesting pace varied according to the region, due to the weather. In São Paulo, despite sporadic rainfall, the harvesting advanced. In Goiás and the Triângulo Mineiro, activities began, but at a slower pace. In Paraná, the harvesting pace stepped up, but rains interrupted activities, which have reached 10% of the area allocated to the first crop, according to Seab/Deral.


In Rio Grande do Sul, rainfall interleaved with sun allowed activities to advance. According to Emater/RS, 39% of the state area had been harvested until February 11. In Santa Catarina, activities have not begun yet, forecast to start in March. In Mato Grosso, the dry weather favored corn sowing. According to Imea, 8.23% of the estimated area had been sown up to February 7.


On the other hand, in Paraná, farmers from northern and western state are concerned about the delay of the soybean harvesting, which may reduce the sowing period for the second-crop corn. So far, 3% of the state area has been sown, against 7% in the 2019/20 season.


ESTIMATES – Data from Conab (Brazil’s National Company for Food Supply) released on Feb. 11 indicate that production in the 2020/21 summer crop should total 23.62 million tons, 8% down from that in the previous season and the lowest since 1990/91. Reductions are linked to irregular rains during crops development in southern Brazil and in most of the southeastern region.


For the second crop, Conab forecasts an increase of 4% in the national area, 2.2% in productivity, and 6.7% in production, currently predicted at 80.07 million tons. For the third crop, estimates still point to an output of 1.77 million tons.


Thus, total output is estimated at 105.4 million tons, 2.9% up from that in the previous year. Conab also forecasts consumption to increase by 4 million tons from that in 2019/20, to 72.14 million tons, reflecting the higher interest of corn ethanol plants and the sector of animal protein. Exports are estimated at 35 million tons. Thus, ending stocks are predicted at 9.9 million tons by late January 2022, similar to that at the beginning of the current season (10.6 million tons).





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