Livestock Producers in Brazil Worry About Corn Exports to China
Livestock producers in southern Brazil are worried that increased corn exports to China may make it more difficult to source corn needed for their livestock operations in southern Brazil.
Hog and poultry production is concentrated in southern Brazil, but the region cannot produce enough corn to meet the demand. To make up the deficit, corn is brought in from the big producing states such as Mato Grosso and Goias in central Brazil.
The concern is that corn produced in northern Mato Grosso for example could more easily move to export facilities in northern Brazil and then onto China instead of southern Brazil. In fact, from northern Mato Grosso, it is closer to export facilities on the Amazon River than it is to livestock producing regions in southern Brazil.
As soon as Brazil and China agreed last November on phytosanitary standards for Brazil corn to be exported to China, the flow of corn to China started almost immediately. Brazil exported 1.1 million tons of corn to China in December and from January 1st through January 29th, the Port of Paranagua exported 570,000 tons of corn to China. This represents 161% of the total volume of corn exports from the port in January of 2022.
According to Sindicarne, which represents chicken and hog processors including JBS and BRF, the Brazilian government has not done enough to facilitate the movement of corn from the large producing states such as Mato Grosso and Goias to states such as Santa Catarina where it is needed the most.
Brazil has improved the logistics for exports, but there has been no progress in improving the link between grain producing regions of central Brazil and the livestock producing regions of southern Brazil. There is no railroad linking the two regions and the grain needed in southern Brazil must be trucked in from central Brazil at a very high transportation cost.
Livestock producers in southern Brazil fear that if the Chinese demand for corn is as great as being forecasted, exporters will be able to out-bid livestock producers for needed corn supplies.
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