Porto Alegre, December 1, 2020 – The corn context is very clear for the entire Brazilian domestic market. As we have pointed out, there is sufficient supply to meet the entire Brazilian domestic demand until January, without serious regional situations. And this is now confirmed with the domestic market registering regional losses in the face of a greater selling interest, which was expected for this month of December and perhaps January. The point is that these offers may be reduced again sharply and generate a new cycle of more aggressive highs in the domestic market, forcing Brazil to import for the entire first half. Importing amid the flow of soybean shipments and high freight prices does not seem a viable solution in the first quarter and could even accelerate prices on the CBOT for corn.
The summer crop losses have been ignored by a good part of the Brazilian market. Some consumers say they have stocks until December and will now only return to the market next year. On the other hand, cooperatives and traders have some opportunity with lower freight prices at this time to improve operating margins and deal with the trade flow over long distances. This combination helps CIF prices to decline and facilitate the regional supply for December.
This selling movement by growers in December and maybe January was being considered by the market due to tax issues, space in warehouses, and cash need. In fact, November is marked by a better selling intention and by facilitating supply in some regions such as São Paulo and southern Brazil, where supply was a little tighter. Even in Mato Grosso, we notice a price decline from BRL 75 to 65 with the selling pressure by growers. This shows some distortions of the commercial data that are released in the state, that is, the 2020 second crop is already 100% sold according to local sources, but there are great offers available, at this moment, from growers.
Agência SAFRAS Latam
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