Porto Alegre, December 11th, 2024 – The domestic corn market is entering December with relatively more balanced prices. In some regions, offers have emerged and supplied consumers for December, interrupting the continued bullish expectations for such a long time. The market has registered highs since the end of the second crop, surprisingly reaching BRL 60/65 a bag even in Mato Grosso. This movement of adjustment at the turn of the year, in a way, contributes to a better regional internal supply, as well as to avoid generating more serious logistics problems in January and greater sales pressure due to the need to free up warehouses for the arrival of the soybean crop. We still depend on the export data for January to close the business year and determine the carryover stocks for 2025.
We must always disregard erroneous information released in the Brazilian market that leads the appropriate participants, such as growers and consumers, to confuse the most realistic situations for the national supply. This occurred in 2024, with some projections by companies and the government regarding the soybean crop and others that projected a “shortage” of corn in Brazil. We are closing the business year, and the reality is approaching our projections, with all regions of the country supplied. We must always emphasize that rising prices do not necessarily indicate shortages.
The retentions made by growers during the second-crop harvest, together with the good domestic demand and the good flow of exports, for this year’s profile, contributed to the recovery of corn prices in the second half of the year. Prices rose more sharply in some regions, such as Mato Grosso, for example, where the market went from BRL 35 during the second-crop harvest to BRL 60/65 last week. Port prices also rose sharply, supporting the second crop in the domestic market, from BRL 58 to BRL 75/76 last week.
The increase in prices in ports was largely due to the commitments of traders to logistics contracts, given the low soybeans available for shipment in the last quarter of the year. The corn option remained present, but to compete with the domestic market, traders had to increase premiums.
The exchange rate was an additional factor in this trajectory, after all, the dollar went from BRL 4.80 to BRL 6.10, a significant jump that affects port levels.
Exports now total 34.4 mln tons in the business year, with November closing at 5 mln tons and December scheduled at 3 mln tons. The reduction in shipments in December and January is normal. The question now remains as to the volume of shipments in January, which could be 2 to 4 mln tons. These data will close the 2024/25 business year and determine the final stocks, together with domestic demand. We will need to wait for the consumption figures from the animal sector to define this closing profile for the current business year.
Sales progressed well in November, reaching 77.7% in the Center-South and 81.4% in the North and Northeast. This explains the less aggressive position of some large consumers in December in their domestic purchases. The good sales in November made it possible to supply some large consumers regionally. Since we still have corn in warehouses and silo bags held by growers, any greater selling intention (be it for liquidity or emptying of warehouses for the arrival of soybeans) causes price adjustment. This symptom has not yet become very evident in Mato Grosso, but it is enough to contain new highs at the end of this year.
In Matopiba, for example, the strong retention of the harvest in Sealba (Sergipe, Alagoas and Bahia) now opens space for a greater selling intention by growers in this region. With consumers in the Northeast converging on purchases at Sealba, demand in the west of Bahia, Piauí and Maranhão has become very focused on exports. Some locations dropped prices last week, such as western Bahia.
Goiás and Mato Grosso, on the other hand, still have good export demand, with traders now focusing on January for shipments. While the domestic market says it will be met in December, traders are absorbing large batches still available.
In the South, industries seem to have positioned themselves for December and are now focusing on the arrival of the crop from Missões, in Rio Grande do Sul, and western Santa Catarina. Even without a major volume of offers, the market is comforted by December’s stocks and will face the challenge of purchasing the new crop in January. For now, productivity potential is very good, with only spotty problems arising in cases where growers did not control leafhoppers.
In the Southeast, the same scenario occurs, i.e., consumers have a different strategy in the region and many still depend on closing stocks to get through the year. Therefore, there is still some price support in the region. The issue comes down to the normal difficulties in loading in warehouses and freight from the 20th until the beginning of the year.
This behavior of growers in January, still with old-crop lots, the arrival of the new crop in the South, as well as the profile of exports in January, will define the alignment of prices at the beginning of the year. We should only consider that the beginning of the soybean harvest will greatly limit the transportation of corn over longer distances, as well as leading consumers to look for offers in closer locations, which will be important for prices regionally.
Safras News