Porto Alegre, September 8, 2020 – While the focus on the summer planting is not that big, the domestic corn market showed an early September with sharp lows in some states. As the high stemmed from the strong retention by growers, when there was this set of sales in a concentrated manner, prices declined quickly. We are still in September, exports have a good but expected pace, and domestic demand is firm. However, corn is not running out in the domestic market, and a large part of the second crop is in warehouses. Concentrated commitments pressure prices, as occurred last week.
The way prices behaved in the domestic market last week is another signal for the growers who do not trade their crop in a staggered manner and taking into account fundamental issues. Price highs during the harvest of the second crop are seasonally difficult without a great external or foreign exchange factor, as we have already assessed in our issues. However, the current media’s exaggeration in the national agribusiness information cycle brings deviations from market attitudes and distorts the price formation. Growers, due to their condition of better liquidity this year, were allowed to retain more corn in warehouses than normal and not sell at any price during the harvest. A move that helps growers to escape critical price periods.
However, this condition keeps more corn in warehouses for future sale, without a definite date to occur. On the other hand, consumers believe they buy cheaper corn at harvest. This year they had the surprise of the retention on the part of growers and the rush for the corn made available by trading companies. This combination of factors, as we pointed out, can only be dismantled by the resumption of sales by growers or by effective imports. As the cost of importing is still far above domestic market prices, the bets have been on the selling decision by growers.
Agência SAFRAS Latam
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