Porto Alegre, September 13th, 2022 – The harvest of Brazil’s 2022 second crop of corn is ending and confirming figures very close to those released by Safras & Mercado. Minor regional adjustments must be brought in next week. At the same time, the planting of the 22/23 summer crop is surprising in its initial speed, including Paraná. The picture may point to an earlier-than-usual summer harvest in 2023, escaping a little from the peak of the soybean crop and the surge in freight. Brazilian growers are now awaiting the USDA September report to assess whether prices can jump in the middle of the US harvest, or the international market will have some moderation for the next sixty days, at least.
The stakes are centered on this USDA September report. As the crop tour and private consulting companies cut production based on productivity, the Brazilian market believes that USDA will be able to confirm what private companies are observing. As we pointed out, the possibility of very low US stocks puts the first half of 2023 in an uncomfortable situation, subject to additional demand from Europe, problems with shipments from Ukraine, and perhaps some additional demand from China for US corn from January. The question is whether the market will impose this upward movement now, in the midst of the US harvest, or wait for the first half of the year for a greater degree of tension that will require rationing of demand from the United States.
It is difficult to bet that Brazil will have corn to meet the world demand between February and June, given the chance of a record soybean crop, which will occupy all spaces in internal logistics. Argentina will only have large volumes from April onward. We can say that the global supply situation in the first half of 2023 is more balanced than that seen in the first half of 2022, when prices were reaching the 2012 highs.
For the Brazilian market, we still have a cycle to close, that is, until January to empty warehouses for the 2023 season. Current exports are going very well, now exceeding 24 mln tons accumulated between February and September. September now has 6.8 mln tons, following August’s figures, as is normal in these two months. Now, we have the four months from October to January to advance exports and determine the volume of the year. Of course, given the profile of the international market, shipments can reach 40 mln tons or more. However, to reach these standards, shipments from October to January will have to stay between 4 and 5 mln tons a month.
Depending on the October line-up progress, we will be able to get a better idea of the volume projected for the year. The Brazilian export window will close over the next four months, as from February onward it will be difficult to find space in the logistics for large volumes of Brazilian corn exports. Depending on this acceleration or not of sales by growers, Brazil may indeed exceed 40 mln tons shipped in the business year, provided that stocks for 22/23 are cut.
This concern with soybean logistics may be motivating cooperatives and growers in the South region to plant the summer corn crop as early as possible. The rain in August and early September has helped a lot. Thus, the three southern states are making progress in the summer corn planting, and so does Paraguay with summer soybeans. From this week, the earlier soybean planting must advance in Paraná, Mato Grosso do Sul, and southern São Paulo. We are waiting for the rains to start in Mato Grosso and the planting progress in the second half of September.
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