U.S corn planting and second crop weather are the indicators for April

While the market tries to find variables for some price adjustment, two factors should prevail from now on in the indicators for corn. At the end of March, the US Planting Intention report, which is full of expectations in view of China’s strategic “mistake” in taxing US soybeans at a time when local growers are deciding to plant. This could drive more areas for corn and deepen the cut in soybeans. Then, the weather scenario for pre-planting in the US Midwest in the second half of April and the development of the 2025 crop follow. Besides, in Brazil, April will be an important month due to the weather for the 2025 second crop. The rain returned at the end of March, but most crops this year have pollination and silking concentrated in April and May. Without rain during this period, the second crop could be a catastrophe, otherwise, we could have a great crop. The situation of the national second crop cannot be confused with that of Mato Grosso, where parts of the state’s crops are in excellent condition at the moment, but another fundamental part is still delayed and dependent on rain in April and May. The May harvest will not meet the national demand from Mato Grosso. This analytical illusion could still generate highs in the domestic market until there is a more advanced harvest of the second crop in June/July, especially if the weather is poor in April and May. Domestic supply is very tight, growers’ sales decisions will take into account the market’s ability to yield or resume highs in the coming few days, and attention to the international environment will start to be part of the environment with the scenario of the 2025 US crop.

The global economic situation begins April with relative tension. Besides normal cyclical information, such as the employment data in the United States to be released on the first Friday and, the following week, the inflation data for March, the government scheduled the definition of tariffs on some key countries such as Canada and China for April 2nd. A good agreement or implementation of tariffs? This is the impasse in markets this Tuesday.

In the meantime, the dollar index has remained stable at 104 points, with small fluctuations during the week. Markets have not yet consolidated this government transition and are expecting sudden movements in light of the new decisions on tariffs to be adopted from April the 2nd. Commodities exchanges and the dollar will operate while readjusting to the new reality.

In Brazil, the preview of the fiscal deficit for February at just over BRL 31 bln shows that the government does not have the public accounts under control and that the magnificent result of January will be eroded by deficits in the following months, as is already happening in February. Lack of control in state-owned companies and exaggerated taxes that contract demand show the profile of events. On the other hand, the increase in the Selic prime rate neutralized one of the problematic effects on the exchange rate in Brazil, that is, arbitrage, which is now positive at 3% and may continue to attract capital to the country, even if in the short term. Brazil’s legal uncertainty is starting to create restrictions, on the part of international investors, for the resumption of financial activities in the country. The political and legal bias may keep Brazil increasingly isolated from the external dollar flow.

The last point is inflation. The Brazilian mechanism of observing past inflation, rather than future inflation, keeps projections framed within a past logic. However, if we annualize the 1.31% inflation of February, we can suggest an inflation trend of approximately 15% for the next twelve months. For this reason, if Brazilian inflation becomes inertial above 1% per month, pressure for new highs in interest rates and the dollar will be back. Fiscal imbalance and the act of ignoring future inflation lead us to the imminent risk of losing economic stability. This is so obvious that government sources have suggested eliminating food and energy from the inflation calculation, in a pure sign of concern about the upcoming indexes.

The real continues to try to find the technical level of BRL 5.66/dollar, still lacking the strength to move upward due to the country’s recovery in attracting capital, a factor that could lead the exchange rate to new short-term appreciations. On the other hand, new inflationary pressures and the fiscal situation remain predominant.

Tags: US, inflation, Market, second crop, tariffs, China, Brazil, soybeans, Canada