Brazil has a good outlook for the 2025/26 corn crop despite credit and leasing difficulties

This is not an easy or stabilizing year for Brazilian agribusiness. In times of high interest rates, a lack of liquidity in the credit system, an international season of prices returning to average levels, and full crops, Brazil begins planting its 2025/26 crop. Economically, there are impacts in the interior of the states, with leases being abandoned, liquidity difficulties for growers and companies, credit restrictions, and very little support from the federal government for the domestic market. The combination of high interest rates and an overvalued exchange rate is a factor that does not provide support for growers in this 2025/26 cycle. Fortunately, corn has a profile of excellent domestic demand and seasonality in the first half of the year, which helps prices stabilize due to the domestic market. However, we need to think carefully about the 2026 second crop environment, given the scenario of international prices, exchange rates, and domestic availability.

With the corn harvest of the 2025 second crop coming to an end, revised to 100.4 mln tons in Brazil’s Center-South region, besides the second crop in the Northeast region, the market is focusing on the summer corn planting profile. The revised planted area survey by Safras & Mercado this September indicated a better area recovery compared to planting intentions. However, it is important to remember that many seed and input purchase contracts still depend on the arrival of financing from banks. A more pronounced shift in area for summer corn may occur as soon as funds reach banks in the Southeast, Goiás, and Bahia in the coming days. This credit process needs to be streamlined to define the planting area.

However, there is a movement toward pre-purchasing seeds and input packages, resulting in an area increase of up to 7% this summer in the Center-South and Bahia. For now, this scenario is not fully determined due to delayed funding from banks. Therefore, we estimate a 3% increase in area in the Center-South and a greater expansion in Bahia during the summer crop due to the opening of a new ethanol plant in the west of the state from the middle of next year.

The fact is that high prices in the first half of 2025 have led growers to expect prices to rise in the first half of 2026, making this summer crop viable. For the 2026 second crop, the area is expected to grow again, but we still maintain our stable estimate for 2026. The issue is credit, the prices set for 2026 barter contracts, and summer soybean planting conditions. Rainfall is expected to be delayed in the Midwest region, with forecasts for the turn from September to October. This does not change the 2026 second crop corn planting window, but some growing areas may be used for sorghum instead of corn.

Therefore, after adjusting the 2025 crop to 140 mln tons, we updated the new figure for the 2026 crop to 142.5 mln tons. In the first supply and demand picture for the 2026/27 business year, referring to the 2026 crop, we observed new growth in the ethanol sector, with demand expanding from 22.8 to 29.4 mln tons, as potential based on industries already installed, with expansions and/or that will begin operations from mid-2026. Even with this expansion in demand in the sector combined with the expansion of domestic demand, which will total 102 mln tons in 2026, there will be a domestic surplus of nearly 40 mln tons, which will need, even if partly, to seek the export channel next year.

Export flow will also be crucial in determining carryover stocks from 2025 to 2026. Corn export commitments reached 22.8 mln tons until last week, practically half of the 42.5 mln ton target for this business year. September shows excellent shipping potential, with 8 mln tons, with 2 mln already shipped during the period. However, from October to January, activity has been weak, both in domestic physical business and in export commitments for October, for example. October has less than 1 mln tons bound for exports, and business in the interior needs to be strong for this export movement to move forward.

The risk, of course, is lower-than-expected exports, given the excessive retention in the interior and port prices that do not keep up with the grower’s selling interest. Last week, despite rising prices on the Chicago Board of Trade (CBOT) even with a new production record, port prices in Brazil remained unchanged due to the appreciation of the real. Last week, we noticed some trading companies showing greater interest in transferring positions to domestic market buyers rather than making new exports due to price highs. Brazil’s ability to raise premiums in light of the bumper US harvest is limited. Therefore, the domestic market will need to adapt to this supply situation or wait for selling pressure at the end of the year to free up warehouse space.

Tags: crop, demand, carryover stocks, corn, export, Brazil, prices