The Van Trump Report

Will Brazil Replace the US as the World’s Biggest Corn Supplier?

Brazil is threatening to dethrone the US as the world’s biggest corn supplier with most analysts still predicting a monster crop despite recent weather setbacks. Importantly, soybean harvest has been slow due to rainy conditions, which has delayed planting of the country’s second-season corn crop. This in turn could mean a significant portion of the second crop gets planted outside the ideal window, putting it at risk from adverse weather down the road.  

For those that aren’t familiar with Brazil’s unusual three-crop cycle, here’s a little refresher on how the corn seasons break down:    
First-season corn, also referred to as “summer corn,” is traditionally cultivated in the south of Brazil, with some areas being sown in the south and northeast states. It is usually planted between August and December and harvested between January and June and currently accounts for roughly 21 percent of all corn production in the country.

Second-season corn, commonly referred to as “safrinha” corn, is planted from December to March, usually following the soybean harvest, and comprises the most extensive area, accounting for most of the production and nearly all exports. That will be roughly 77% in the 2022/2023 harvest estimate, according to USDA. Late planted safrinha corn is always at risk of running out of moisture before maturity as the second-crop window butts up against Brazil’s dry season.

Third-season corn is planted only in some states of the country’s North and Northeast. Planting occurs around May with harvest in October. Third-season corn accounts for approximately 2% of total production.
USDA most recently pegged Brazil’s total 22/23 corn crop at 125 million metric tons (MMT), up from 116 last season. Brazil statistics agency Conab last estimated the crop at 123.74 MMT with the agency recently noting that soybean harvest delays could reduce the size of this year’s safrinha crop in some parts of the country. However, several analyst reports have recently forecast that record yields in top-production state Mato Grosso will offset much of the yield losses in southern states that are battling rainy weather. Forecasters at StoneX, for instance, actually increased their most recent estimate by +7.1 MMT to a record 130.6 MMT despite the planting delays.  

The large crop combined with Brazil’s newest buyer, China, is forecast to make the country the top global corn supplier in 22/23, surpassing the US. StoneX pegs Brazil’s corn exports at 47 MMT while USDA is penciling 50 MMT. By comparison, US corn exports are projected at 46.99 MMT by USDA.      

Brazil’s exports will be boosted by the country’s new corn export protocol with China, which was signed late last year. Brazil corn exports were up a whopping +255.9% in January primarily as a result of the new market. Some analysts believe that China can import as much as 18 MMT of corn from Brazil in 2023. For what it’s worth, 18 MMT is where USDA pegs China’s total 22/23 corn imports.

Even if Brazil doesn’t meet some of this year’s lofty goals, analysts say Brazil’s corn production and share of global trade could still climb further from here. USDA’s Economic Research Service (ERS) estimates the country could put another 49 million acres of cropland into production by 2031. The expansion would primarily be driven by soybean acres but as safrinha corn follows soybean harvest, it means more potential for increased second-crop corn production as well. (Sources: USDA, Conab, Reuters)

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