Brazilian corn exports explode – but that could be good for American farmers

Where will your coming corn crop be going?

In past blogs I’ve mentioned that Brazil is likely to buy a bunch of that corn you’ve been planting, given their big poultry and pork production numbers. And it’s always nice when the data backs one up on such claims.

That’s the potential good news. The other side of that coin is that Brazilian corn exports are way up.

In Brazil’s number one second-crop corn state, Mato Grosso, for the first five months of this year, that state’s corn exports have shot up 36% over the same period of 2015. China was the Brazilian state’s biggest buyer, at $2.6 billion dollars, followed by Rotterdam, Iran, Thailand and others.

At any rate, that’s a 112% increase in Mato Grosso corn exports over the first five months of 2015. Guess we won’t be seeing so many piles of corn stored under tarps like we’ve seen in past years.

Okay. Their exports are up. But they still have a huge pork and poultry industry that demands feed. So while their exports may sound like a competitive problem for U.S. farmers, it may work out in your favor. Brazilian grain stocks are not enormous. As a result they may have to import corn for domestic policy reasons, to keep inflation low and keep food prices down.

For years, Mato Grosso producers grew a second crop of corn in order to prep the ground for the next year’s early beans, whatever the price. I’ve seen Mato Grosso corn at under $2 per bushel in the past. But it was more about agronomics than economics.

And it’s not just Mato Grosso, though that state is number one in second-crop corn and number two in main-crop corn. It’s national. Despite a sagging economy overall, political unrest and the Zika virus, Brazil as a country by May had already exported $1.2 billion worth of corn, versus just 569 million in the first five months of last year.

Now for the splash of cold water: Soybeans remain the major competitive cash crop for Brazilians in general, whether in Mato Grosso or other states. The Commerce Ministry says Brazil also sold a lot more soybeans over the first five months of 2016 than it did for the same period of 2015. Brazilian soy exports were valued, for that period, at $3.7 billion versus just $2.7 billion for the same period of last year.

So even if Brazil decides to buy U.S. corn it still remains your main competitive threat, and that won’t change much despite all the economic and political unrest.

The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.

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