Many compare the Brazilian situation of supply and prices of early 2020 with the 2016 picture. Undoubtedly, similarities exist, such as high exports in 2015 and cut in the planting of the 2016 summer crop, factors that originated the record high that year. However, in 2016 carryover stocks were below 2 million tons, and highs generated panic and complete lack of offers. The only way to the market was to obtain supplies from Argentina and there was a clear shortage. In 2020 there is an adjusted situation, but no shortage, and firm prices operating within the expected framework, that is, a small summer crop and not so high carryover stocks due to the 2019 export record. This does not prevent the market from seeking imports as an alternative still in this first half of the year. However, domestic prices need to rise further to make it feasible.
In 2015 Brazil exported 34.18 million tons of corn. The largest volume shipped up to that year. The record 2015 production and low domestic prices generated the export environment. But this scenario also generated another symptom for the market, which was the loss of strength for planting the 2016 summer crop. Not even high exports in 2015 were able to maintain a good planting intention for the 2016 summer crop. The result was low carryover stocks of just over 3 million tons. However, the combination of the summer crop with carryover stocks did not cover the demand of the first half, and the only alternative for the market was to seek imports of around 3.3 million tons, the largest in the Brazilian history. In 2016 there was a full shortage in the first semester.
In 2020 the history repeats itself, even albeit in milder conditions. In 2019 exports are expected to close at around 40.50/41 million tons, since the Secex numbers this year are above the data provided by ports, which point to 39.4 million tons. Anyway, the 2019 export figure is the new Brazilian record and emptied possible surpluses in the transition of the business year.
