Cut in corn domestic demand may hit 2 to 3 million tons in 2020


            As we have pointed out in our last newsletters, Brazil is not an island in the global health and economic framework, nor is Brazilian agribusiness exempt from the global recessive effects. The sector is not limited to soybeans. Indeed, for soybeans, if Brazilian growers decide to sell the 2020 crop at this time and lock in their costs for 2021, they will cope with little practical effect from the crisis we are experiencing. The government has already defined its emergency credit plan for the sector, so there will be plenty of resources for the 2020/21 crop and credit in the system. However, several segments suffer from the effects of the economic standstill. The more prolonged this stoppage, the worse for segments that operate with perishable products, such as agribusiness, and this period of economic paralysis is running out for these segments. For the corn market, the picture is now of strong concern over liquidity and not necessarily demand. Demand may suffer an impact, but that can be offset by exports.

             The health crisis has advanced globally and with very similar economic effects in several countries. The social paralysis brings them unprecedented and surprising economic effects. There is no doubt about the need for social isolation to combat COVID-19 in areas of greater risk and more aggressive incidence. Without these procedures, the process could become uncontrollable, and the situation might be unpredictable. However, attention must also be focused on employment and economic activity. Governments will not be able to sustain the economy alone. Not even more totalitarian governments such as China and Russia can establish this type of control in their economies. For this reason, coexistence with COVID-19 and the criterion for social blocks must also address this economic environment, otherwise the public sector itself will collapse due to the lack of tax collection.