Sao Paulo – February 04, 2021
Brazilian Corn Production decreases by 2 million metric tons (2 MMT) its corn production forecast for market year (MY) 2020/21 (March 2021 – February 2022) to 105 MMT, in response to reduced yields for first-crop corn, as well as the likelihood of delayed planting for large portions of second-crop “safrinha” corn.
The forecast, if realized, would still represent a 2.4 percent increase over Post’s estimate for the MY 2019/20 season, as well as a new corn production record for Brazil.
It expects Brazil’s corn area in MY 2020/21 to expand by 1 million hectares (MHa), reaching 19.5 MHa, an all-time high.
Despite concerns about late planting of the safrinha crop, producers will be motivated by near record corn prices to expand corn acreage even as they are taking a risk on productivity by pushing the growing cycle deeper into the dry season.
Strong domestic demand from the poultry and livestock sectors, as well as the growing corn ethanol industry are greatly expanding corn consumption in Brazil and boosting domestic prices.
Paired with an abundance of exports, the internal corn price in Brazil hit record highs in recent months and is expected to remain firm throughout 2021.
Export Corn Trade raises its forecast for MY 2019/20 corn exports by 1.5 MMT, to 35.5 MMT, which would still be a yearover-year decrease of approximately 11 percent.
Record exports of nearly 40 MMT in 2018/19 severely depleted stocks, while strong internal demand by the poultry and livestock sectors ensured that Brazil would consume a greater portion of its MY 2019/20 crop.
However, the rapid pace of MY 2019/20 exports through December is still well ahead of the five-year average, even as it lags behind the volumes seen in MY 2018/19.
For MY 2020/21, Post maintains its corn export forecast at 37 MMT, based on an expectation of expanded production, as well as the likelihood that the BRL will remain weak as Brazil’s GDP growth sputters in the wake of the coronavirus pandemic.
Brazil Corn Imports raises its MY 2019/20 import forecast by 100,000 MT, to a total of 1.2 MMT.
The change is based on strong internal demand from Brazil’s poultry and livestock sectors, along with mounting worries about dwindling stocks due to the rapid pace of exports.
Also raises its forecast for MY 2020/21 corn imports to 2 MMT, based on the expectation of severely depleted stocks at the end of the current MY and the expectation of continued strong exports for the next crop.
Brazilian imports of corn surged in the last quarter of 2020, totaling close to 650,000 MT between October and December, as poultry and livestock producers struggled to procure feed rations for their animals.
In response, the Brazilian government announced on October 16, 2020, the suspension of import tariffs for corn and soybeans from countries outside the Mercosur trade bloc.
Brazilian Corn Consumption maintains its estimate for Brazil’s MY 2019/20 domestic consumption at 69 MMT, based on increased poultry and pork production, as well as continued expansion of the corn ethanol sector, despite an initial slowdown in production related to the coronavirus pandemic.
That represents a 3 percent increase over MY 2018/19.
For MY 2020/21, also maintains its forecast for corn consumption at 71 MMT, which is 3 percent higher than MY 2019/20.
The increase is based on the expectation of continued expansion of the Brazilian livestock and poultry industries in reaction to strong demand from China and other exports markets, as well as increased production of corn ethanol in Brazil’s Center-West region.
Corn consumption in Brazil has nearly doubled over the last two decades, as the country became the world’s largest chicken meat exporter and fourth-largest pork exporter.
Brazilian Wheat Production raises its estimate for MY 2020/21 (October 2020 – September 2021) wheat area by 10,000 hectares (Ha) to 2.34 million hectares (MHa).
However, lowers its production estimate to 6.25 million metric tons (MMT), a decrease of 350,000 metric tons (MT) from the previous estimate but still more than 20 percent larger than the MY 2019/20 crop.
High internal prices incentivized expanded planting in the major production regions, supporting the estimate for a year-over-year increase of 15 percent for area.
Production grew by one-fifth but was not quite as large as previously expected at the start of the season.
Nevertheless, the MY 2020/21 crop is significantly larger year-over-year, as yields rebounded from the damage caused by adverse weather last season.
Brazilian Wheat Imports Trade maintains its import forecast for MY 2020/21 at 6.5 MMT, based on the year-over-year increased production estimate leading to less demand for imported supplies during this market year.
Moreover, the devalued BRL has made dollar-dominated imports more expensive and reduced mills’ willingness to make large purchase unless absolutely necessary to meet demand.
Argentine wheat is the dominant import source for roughly the first half of the calendar year, given the timing of the harvest there.
Exports maintains its MY 2020/21 export forecast at 750,000 MT in response to the rebound in harvest volume year-over-year, as well as the weakened BRL making Brazilian exports particularly popular on the international market.
Brazil generally exports only a small share of its wheat production, usually around 10 percent.
Brazilian Wheat Consumption maintains its forecast for Brazil’s wheat consumption in MY 2020/21 at 12.2 MMT.
Per-capita consumption of wheat in Brazil has slumped in recent years but has been offset by population growth, leaving the overall wheat consumption level relatively static.
As with other staple products early on in the COVID-19 pandemic, Brazilians stocked up on wheat flour and other wheat-based products like pasta and industrially produced bread, as social distancing orders went into effect in March and April 2020.
The Brazilian Manufacturers Association of Biscuits, Pasta, and Industrialized Bread & Cakes (ABIMAPI) reported the industry’s sales grew by 15 percent year-over-year in the first few months of 2020.
