National Supply Company cuts estimate for Brazil’s corn crop; expects more imports

RIO DE JANEIRO, BRAZIL – The state-owned CONAB (National Supply Company) yesterday, June 10, reduced its estimates for Brazil’s total 2020/21 corn output to 96.39 million tons, from 106.4 million last month, amid expected shortfalls for the cereal’s second crop.

Projections for Brazil’s corn imports were increased to 2.3 million tons while exports were cut to 29.5 million tons, from 35 million tons in May’s forecasts.

CONAB said that the adjustment for foreign purchases “comes after the verification of the increase in corn imports in the first semester of 2021 at a rate higher than 60% of what was observed in the same period of 2020, as well as an expected increase in the second semester.”

As for exports, the state company sees less desire from trading companies to sell the grain to the foreign market, with domestic grain prices more profitable in the current situation.

CONAB cut its projection for the second corn crop to 69.95 million tons, from 79.8 million tons in the last forecast, with a 6.8% drop in relation to the previous season.

“The 2020/21 second corn crop will fall substantially below the levels projected for the previous month due to drought conditions seen in the main producing states, pointed out as the main reason for the cuts made.”

The company also warned that the arrival of cold weather in the South region is another concern for the Brazilian second crop. “With late planting, also a consequence of climate irregularity, the risk of frost has increased significantly and may further impact the numbers,” it said in the survey.

Given these adjustments, the final corn stock expected for the 2020/21 cycle is 7.6 million tons, a 27.4% reduction compared to the previous harvest. Last month, stocks were still estimated at 10.86 million.

Soy

For soy, the company projected Brazil’s 2020/21 crop at a record 135.86 million tons, a slight increase from the 135.4 million seen last month. In the annual comparison, the increase stands at 8.8%.

Consequently, exports should reach 86.65 million tons, an increase of 770,000 tons compared to the last report.

The company pointed out that internal demand was estimated at 50.24 million tons, a drop of approximately 200,000 tons compared to the last report, due to the decrease in the biodiesel mixture to diesel from 13% to 10% for the months of May and June.

“However, part of the loss of soy oil consumption, which would be used for biodiesel production, should be transferred to exports, as there is strong international demand and there are grain harvest issues in Argentina, a major global exporter of soy oil.”

Brazil’s cotton production should total 2.34 million tons (plume), against 2.44 million previously estimated, CONAB says. Brazil’s 2021 wheat crop was estimated by CONAB at 6.94 million tons, from 6.639 million previously.

Source: Forbes