Aug. 2, 2022
The news out of Brazil in recent weeks was the potential for Brazil to start exporting corn to China maybe as soon as the end of this year if they can work out phytosanitary standards. Additional news out of Brazil is that they may start exporting corn to the European Union as well.
Corn production in western Europe is being severely impacted by hot and dry conditions with little near-term relief. Complicating the situation even more is the fact that corn exports from Ukraine have been halted by the war with Russia. Ukraine was western Europe's main supplier of corn and it remains to be seen if Ukraine will be able to resume corn exports in any significant quality.
In the meantime, corn exports out of Brazil are expected to at least partially fill the void. Grain companies are aggressively buying corn in Brazil and corn prices in Brazil were up R$ 3.00 to R$ 4.00 per sack last week (approximately $0.25 to $0.35 per bushel).
According to the Brazilian consulting firm Consultoria TF Agroeconomica, European corn production is currently estimated at 68 million tons with 16 million tons of imports. If the production declines further due to continued dry weather and if Ukraine is not able to ramp up corn exports, it could open the door to significant Brazilian corn exports to western Europe.
This is of course good news for Brazilian corn producers who will start planting their 2022/23 summer corn crop at the end of August if the weather permits. The summer corn crop only accounts for approximately one quarter of Brazil's corn production. The safrinha corn crop planted after the soybeans are harvested in January and February accounts for approximately three quarters of Brazil's corn production.