Delay in Brazil’s corn planting could further reduce already limited world supplies

Corn producers in Brazil can’t afford to fail as global corn supplies hit a decade low this year. This is reported by Reuters.

Brazilian corn stocks are declining ahead of the new season, which starts March 1. And sowing of the second corn crop, which accounts for nearly 80% of the country’s annual corn production, has been slow so far.

Brazil’s second corn crop is expected to be slightly ahead of last year’s. Corn planting will continue through March, with harvesting beginning in May.

In the state of Mato Grosso, the main corn producer, farmers had planted only 1% of the planned area by January 24. The pace of sowing is the slowest since 2011, but close to that of 2021. Both of these years, as well as 2016, when sowing was also slow, were among the worst harvests in the state.

Untimely rains prevented soybean harvest in Mato Grosso, which delayed the sowing of corn, which is placed in the same fields. This narrowed the planting window for maize. By January 31, corn sowing in the state must be at least 12% complete in order for the planting season to be completed before the dry season begins.

The state of Parana, which is Brazil’s second largest corn producer, planted 9% of the plan this week, a relatively normal pace. The late planting of corn in Paraná poses a risk of frost damage to plants later in the season.

The states of Mato Grosso and Paraná account for two-thirds of Brazil’s second corn crop.

Neighboring Argentina is struggling with drought this season caused by the La Niña phenomenon. Brazil’s second corn crop is not as dependent on La Niña or El Niño as Argentina’s. But Brazil’s crop years do not usually coincide with more strongly La Niña years.

Brazil had a good second corn harvest in mid-2024, which was about 12% smaller than the previous record year. However, Brazilian corn exports since July are down about 29% from the previous year.

Shipments to China, which accounted for 29% of Brazilian corn exports in 2023, were down more than 90% from July 2023-January 2004.

The decline in exports did not affect Brazilian corn stocks, as domestic consumption was high.

USDA estimates that the ratio of Brazilian corn stocks to consumption for the 2024/2025 season will not exceed 2.1%, a 42-year low and down from 7.1% last season

By comparison, the U.S. Department of Agriculture estimates the U.S. corn stocks-to-use ratio for the 2024/2025 season at 10.2%.

This suggests that corn producers in Brazil cannot afford to fail, and any shortfall could result in a loss of share in global exports. A poor harvest in Brazil would extend the winning streak for U.S. corn exporters, who have been shipping grain more aggressively than usual in recent months.

The U.S. and Brazil together account for about 57% of global corn exports.

Both exporters lament the loss of Chinese buyers, who could theoretically step up at any time. If China returns to the Brazilian corn market, it could seem like a loss to the US.

But with weak supply from Brazil, purchases by Chinese importers could indirectly encourage other Brazilian buyers to turn to the U.S., especially later this year if the U.S. corn crop rebounds as expected.

Tags: corn, Brazil, stocks