Brazilian market of corn has sharp lows with growers pressuring sales

Some selling pressure was expected by the Brazilian market at the end of this year. Some wrong analyses saying that there would a shortage of corn in December, some indicating large export figures, others only speaking of growing demand, may have influenced growers to retain higher-than-expected stocks to sell at the end of the year. As we have pointed out, we would have corn to meet Brazilian domestic demand until January without problems. Supply issues are focused on the first half of 2021.

The corn market arrives in December with the increase of selling interest in general. The movement started in Mato Grosso do Sul and Mato Grosso and has now expanded to Paraná, Goiás, and Minas Gerais. There is only this pressure in Santa Catarina and Rio Grande do Sul because supply is really very restricted. The point is that, on the side of buyers, there was also a previous stance of building some stocks to wait for this new year more comfortably. Now we can see the distortion created in the trading figures reported in Mato Grosso. Although entities inform that the second crop was 100% sold, we reach December with offers from growers in the state and without demand liquidity.

Another important point is that exporters have decreased their buying interest for the past thirty days, maintaining the fulfillment of scheduled shipments. Price lows are strong because growers are coming out for sales while consumers are only accepting deals at ever-lower prices. Cooperatives and cereal traders are obliged to decline over-the-counter levels as forward commitments increase and they have been unable to put lots in the domestic market. Exporters can return to the market if there is a good volume of offers at BRL 69/70 at ports for January and perhaps February. Perhaps this is the point of readjustment of the domestic market.

As there have been no importation movements, especially with the current low prices, the domestic market will need to resume purchases sometime in the first quarter of 2021. However, one situation seems very clear. When the soybean crop begins to reach the domestic market, with the harvest entirely concentrated in February and March, high freights and little space for corn flow, the situation can change considerably from the current one.

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