Exchange rate, CBOT, and Brazilian growers’ situation hinder corn second-crop prices

The corn harvest of the Brazilian second crop has started slowly in Mato Grosso, but the real pace will occur in mid-June. However, some variables have started to affect domestic prices in advance this year: the growers’ decision to invest in soybeans in the second half of the year, leading to greater sales pressure on corn; credit difficulties; the prospect of a possible super crop in the United States; and a clear situation for a large second corn crop in Brazil, following the example of summer soybeans. Excellent rainfall in April along with the still balanced climate in May highlight the feeling that Brazil needs to find export routes again. The CBOT and the exchange rate have not contributed to improving prices at ports, which has again kept second-crop corn at low levels. The US weather and the exchange rate in Brazil will be the variables from now on to guide second-crop corn prices, since it will be difficult to have a profile of strong domestic corn retention due to credit difficulties.

The Brazilian consumer market is now awaiting the arrival of the second crop and the restoration of regional supply. Prices are still on an adjustment curve during this transition period from summer to second-crop corn. For this reason, many consumers are only absorbing the volumes needed for the short term and waiting for the harvest to arrive to absorb volumes at export levels. During this period, the market usually slows down, partly because there is not enough corn available to generate all this early steadying. However, as the weather for the second crop was very favorable in April and the outlook for production is very good, sellers lowered prices in advance as they began to worry about the environment for the sales of the 2025 second crop.

Brazilian corn sellers began to make trading decisions that led to the worsening of domestic prices. The first factor is that prices were already high, and selling would not be a bad option, as is still not the case with the prices of corn available at the beginning of May. However, they also

decided to sell corn due to their planning with soybeans. The expectation that soybeans will bring great price potential in the second half of the year has led many growers to try to hold on to soybeans for longer. However, Brazil is going through an intensified credit crisis, whether due to high interest rates or the risk of judicial recovery. Therefore, growers must negotiate physical corn to cover their current crop and credit expenses.

This combination of factors leads to a market in May in which buyers want specific volumes and growers are more interested in selling. The downtrend is an inevitable curve in this environment without a new fact. The productivity potential in this second crop should exceed the results obtained in 2024 in several regions, except for Minas Gerais and São Paulo. With 96 mln tons of second crop or more, depending on the harvest and confirmation of productivity, the domestic market has no other option but to allocate volumes for exports. Now, the domestic market will confirm that, despite the excellent demand from animals and ethanol, we will have to export 40 mln tons, at least this year.

Thus, the domestic corn market should recover the reality of the information and restrict the use of erratic and unrealistic data, such as carryover stocks of only 2 mln tons, or a Brazilian crop of less than 125 mln tons. Eventually, the market proves to the very market the reality of the data.

Therefore, we now need to assess the climate for the 2025 US crop, based on excellent planting, but with pollination and silking having a critical phase in July this year. A strong export scenario in the United States and some weather problems could still generate positive volatility for international prices. This movement is important because, from now on, prices at ports in Brazil and the export pace will define the price profile of the domestic market. In 2025, Brazilian shipments will likely start a little later, with more intensity from July onward. It seems that there will not be much room for corn retention in the second crop, given the spaces still used by soybeans and the growers’ lack of willingness to sell soybeans and retain corn. Perhaps, very low prices at harvest could trigger this decision of not selling corn and find some room for retention. However, in fact, only exports will be able to rule this scenario of price recovery after the end of the harvest of the corn second crop.

Thus, the week closed with indications at ports between BRL 67/70 for July/August and September shipments, with some more active buyers and better premiums, between BRL 69/71. The domestic market is trying to adjust to this environment and, when it is linked to export business, the domestic market will find a point of balance and stop the lows. Lack of domestic liquidity and the need for flow generally impose stronger export rhythms that are only noticed when the line-ups evolve.

Tags: harvest, corn, Brazil, prices, soybeans, crop, Market